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?

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?

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