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AGI and partnerships: calculate Teresa's AGI

9. Teresa, an attorney, earns $300,000 from her practice. During the year, she paid $50,000 to acquire a 20% interest in a partnership that produces a $200,000 loss ($40,000 distributive share to Teresa). She also receives $35,000 in interest and dividends on other investments. What is Teresa's AGI if she is a material participant in the partnership? What is her AGI if she does not participate in the partnership?

a. $295,000 if material and $295,000 if she does not participate
b. $295,000 if material and $335,000 if she does not participate
c. $285,000 if material and $335,000 if she does not participate
d. $335,000 if material and $335,000 if she does not participate

Solution Preview

AGI calculation

$300,000 self employment income
$35,000 interest and dividends
($40,000) partnership loss

$295,000 AGI, if material participant

$40,000 passive ...

Solution Summary

The solution discloses the full calculation to determine AGI including notes in explanation.

$2.19