Reference no: EM132826230

Question - The Greyjoy Partnership is equally owned by Theon and Yara. Theon's basis in his partnership interest including his share of partnership liabilities is $89,100 at the beginning of 2020 calendar tax year of the partnership. Yara's basis in her interest is $35,640 including her share of partnership liabilities. Greyjoy reported the following income and expenses for its 2020 calendar tax year:

Income from services $641,520

Guaranteed payment to Theon 320,760

Guaranteed payment to Yara 213,840

Salaries to non-partner employees 71,280

Depreciation expense 64,152

Rent expense 71,280

Utilities expense 35,640

Tax-exempt interest income 32,076

Dividend income 21,384

Charitable contributions 7,128

Political contributions 14,256

Long-term capital loss 17,820

Cash distribution to Theon on 12/31/2020 37,422

Cash distribution to Yara on 12/31/20 85,800

The Greyjoy Partnership also increased its recourse liabilities by $26,400 during 2020 and that liability is allocated equally to the two partners.

Required -

(a) Compute Greyjoy's ordinary income or loss from operations for its 2020 calendar tax year.

(b) List any separately stated items passing for the equal partners.

(c) Compute each partner's basis in their partnership interest at the end of 2020, showing any income or gain taxable to them, how the distributions are treated, and any losses or expenses that are deductible by them.