Allen and Bob are equal partners in the AB Partnership. Bob manages the business and receives a guaranteed payment. What amount and character of income will Allen and Bob report in each of the following independent situations?
a. The AB Partnership earns $160,000 of ordinary income before considering Bob’s guaranteed payment. Bob is guaranteed a $90,000 payment plus 50% of all income remaining after the guaranteed payment.
b. Assume the same facts as Part a except Bob’s distributive share is 50% with a guaranteed minimum of $90,000.
c. The AB Partnership earns a $140,000 long-term capital gain and no ordinary income. Bob is guaranteed $80,000 plus 50% of all amounts remaining after the guaranteed payment.