A. This year, Darrel’s distributive share from Alcove Partnership includes $5,000 of interest income, $2,000 of...

A.

This year, Darrel’s distributive share from Alcove Partnership includes $5,000 of interest income, $2,000 of dividend income, and $70,000 ordinary business income. Assume that Darrel materially participates in the partnership. How much of his distributive share from Alcove Partnership is potentially subject to the net investment income tax?

B.

This year, Darrel’s distributive share from Alcove Partnership includes $5,000 of interest income, $2,000 of dividend income, and $70,000 ordinary business income. Assume that Darrel does not materially participate in the partnership. How much of his distributive share from Alcove Partnership is potentially subject to the net investment income tax?

Expert Solution

Solution:-

A. This year, Darrel’s distributive share from Alcove Partnership includes $5,000 of interest income, $2,000 of dividend income, and $70,000 ordinary business income. Assume that Darrel materially participates in the partnership. How much of his distributive share from Alcove Partnership is potentially subject to the net investment income tax:-

If Darrel materially participates in the business, the ordinary income is not passive to him and should not be subject to the net investment income tax. The $5,000 of interest income and the $2,000 of dividend income are potentially subject to the net investment income tax.

B. This year, Darrel’s distributive share from Alcove Partnership includes $5,000 of interest income, $2,000 of dividend income, and $70,000 ordinary business income. Assume that Darrel does not materially participate in the partnership. How much of his distributive share from Alcove Partnership is potentially subject to the net investment income tax:-

If Darrel is not a material participant in the partnership, the $5,000 of interest income, the $2,000 of dividend income, and the $70,000 of ordinary business income are potentially subject to the net investment income tax.

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ekkarill92 answered 2 years ago

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