On December 31, 2013, Edward Baker gave his son, Allan, a gift of a 50% interest in a partnership in which capital is a material income-producing factor. For the year ended December 31, 2014, the partnership's ordinary income was $100,000. Edward and Allan were the only partners in 2014. There were no guaranteed payments to partners. Edward's services performed for the partnership were worth a reasonable compensation of $40,000 for 2014. Allan has never performed any services for the partnership. What is Allan's distributive share of partnership income for 2014?
a. $20,000
b. $30,000
c. $40,000
d. $50,000
Answer: B
Tax
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