Jhumpa, Stewart, and Kelly are all one-third partners in the capital and profits of Firewalker…

Jhumpa, Stewart, and Kelly are all one-third partners in the capital and profits of Firewalker General Partnership. In addition to their normal share of the partnerships annual income, Jhumpa and Stewart receive an annual guaranteed payment of $10,000 to compensate them for additional services they provide. Firewalkers income statement for the current year reflects the following revenues and expenses: Sales revenue $ 340,000 Interest income 3,300 Long-term capital gains 1,200 Cost of goods sold (120,000) Employee wages (75,000) Depreciation expense (28,000) Guaranteed payments (20,00
Jhumpa, Stewart, and Kelly are all one-third partners in the capital and profits of Firewalker General Partnership. In addition to their normal share of the partnerships annual income, Jhumpa and Stewart receive an annual guaranteed payment of $10,000 to compensate them for additional services they provide. Firewalkers income statement for the current year reflects the following revenues and expenses: Sales revenue $ 340,000 Interest income 3,300 Long-term capital gains 1,200 Cost of goods sold (120,000) Employee wages (75,000) Depreciation expense (28,000) Guaranteed payments (20,000) Miscellaneous expenses (4,500) Overall net income $ 97,000 a) Given Firewalkers operating results, how much ordinary business income (loss) and what separately stated items (including the partners self-employment earnings [loss]) will it report on its return for the year? b) How will it allocate these amounts to its partners? c) How much self-employment tax will each partner pay assuming none has any other source of income or loss?

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