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    Distinction in net ordinary income, separately stated income

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    What are the distinctions between net ordinary income and separately stated income and deductions? What is the rationale for separately stating those items as individual K and the K-1?

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    Certain items are separately stated because they were not generated in the ordinary course of business. As such, they may flow to other areas of the Form 1040 for alternative treatments.

    Let's look at some examples:

    1. Interest and dividends are portfolio income that is reported on Schedule B. It is not necessary to have portfolio income to run a business and therefore it is separated for its ...

    Solution Summary

    The 274 word solution explains the difference in types of income and uses 5 examples to demonstrate the types.