Partnership Income and Basis Adjustments. Mark and Pamela are equal partners in MP Partnership. The partnership, Mark, and Pamela are calendar year taxpayers. The partnership incurred the following items in the current year:
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Sales & \( \$ 450,000 \) \\
Cost of goods sold & 210,000 \\
Dividends on corporate investments & 15,000 \\
Tax-exempt interest income & 4,000 \\
Sec. 1245 gain (recapture) on equipment sale & 33,000 \\
Sec. 12.31 gain on equipment sale & 18,000 \\
Long-term capital gain on stock sale & 12,000 \\
Long-term capital loss on stock sale & 90,000 \\
Short-term capital loss on stock sale & 97,000 \\
Depreciation (no Sec. 179 or bonus depreciation components) & 30,000 \\
Guaranteed payment to Pamela & 2,000 \\
Expense for business meals & \\
Interest expense on loans allocable to: & 42,000 \\
Business debt & 9,200 \\
Stock investments & 2,800 \\
Tax-exempt bonds & 14,000 \\
Principal payment on business loan & 5,000 \\
Charitable contributions & 80,000
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a. Compute the partnership's ordinary income and separately stated items.
b. Show Mark's and Pamela's shares of the items in Part a. Which items would qualify as business income for the QBI deduction?
c. Compute Mark's and Pamela's ending basis in their partnership interests assuming their beginning balances are \( \$ 150,000 \) each.
