What is Tracy's distributive share?
Tracy has a 25% profit interest and a 20% loss interest in the Dupont Partnership. The Dupont Partnership reports the following income and loss items for the current year:
Net long-term capital loss $50,000
Net Sec. 1231 gain 45,000
Ordinary income 110,000
The partnership has a $105,000 ($110,000 + $45,000 - $50,000) net profit for the year. Tracy's distributive share is calculated using her profits interest percentage, 25%.
Net long-term capital loss $12,500
Net Sec. 1231 gain 11,250
Ordinary income 27,500
The loss percentage is only used in years in which the partnership has a net loss.
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