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Dany gave 50 percent of her business to her son Bobby. The partnership had a profit...

Dany gave 50 percent of her business to her son Bobby. The partnership had a profit of $100,000 for the year and capital is a material income producing factor. Dany performed services worth $25,000 as reasonable compensation and Bobby performed no services. What is the maximum amount of income Bobby can report from the partnership for the year?

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Answer #1

Bobby can report a maximum income of $ 37,500 [50% of ($ 100,000 - $ 25,000)] from the partnership for the year

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