Illuminating Light Partnership had the following revenues, expenses, gains, losses, and distributions: Sales$60,000Long-Term Capital Gain$8,000Qualified Dividends$5,000Cost of Goods Sold$40,000Employee Wages$15,000Guaranteed Payment to Managing Partner$25,000Municipal Bond Interest$5,000Section 179 Expense$10,000MACRS Depreciation$8,000Section 1231 Gains$3,000Fines and Penalties$1,500Given these items, what is Illuminating Light's ordinary business income (loss) for the year?
What will be an ideal response?
($28,000), computed as follows:
| ILLUMINATING LIGHT PARTNERSHIP | ||||||
| Accounts | Item | Amount | Ordinary Business Income (Loss) | |||
| Sales | OI | $ | 60,000 | $ | 60,000 | |
| Long-Term Capital Gain | SS | $ | 8,000 | |||
| Qualified Dividends | SS | $ | 5,000 | |||
| Cost of Goods Sold | OI | $ | 40,000 | $ | (40,000 | ) |
| Employee Wages | OI | $ | 15,000 | $ | (15,000 | ) |
| Guaranteed Payment to Managing Partner | OI | $ | 25,000 | $ | (25,000 | ) |
| Municipal Bond Interest | SS | $ | 5,000 | |||
| Section 179 Deduction | SS | $ | 10,000 | |||
| MACRS Depreciation | OI | $ | 8,000 | $ | (8,000 | ) |
| Section 1231 Gains | SS | $ | 3,000 | |||
| Fines and Penalties | SS | $ | 1,500 | |||
| TOTAL | $ | (28,000 | ) | |||
| *Included in ordinary business income (loss)-OI | ||||||
| **Separately stated item-SS | ||||||
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