The WE Partnership reports the following items for its current tax year:ItemAmountIncomeOperating income$90,000Rental income15,000Interest income:Tax-exempt municipal bonds2,000Corporate bonds4,000Sec. 1231 gain20,000Sec. 1245 gain18,000Long-term capital gain7,000ExpensesRental expenses12,000Salaries paid to employees (not partners)30,000Charitable contributions5,000Interest paid related to borrowings used to finance municipal bonds3,000What is the WE Partnership's ordinary income for the current year?
What will be an ideal response?
The income items, which are ordinary, total $108,000 ($90,000 operating income + $18,000 Sec. 1245 gain). The only ordinary expense is the $30,000 of salaries. Accordingly, partnership ordinary income totals $78,000 ($108,000 - $30,000).
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