Steve wishes to pass his business on to his children, Tracy and Vicki, and gives each daughter

Question:

Steve wishes to pass his business on to his children, Tracy and Vicki, and gives each daughter a 20% interest to begin getting them involved. Steve retains the remaining 60% interest. Neither daughter is employed by the which buys and manages real estate. Steve draws only a $40,000 guaranteed payment for his work for the Reasonable compensation for his services would be $70,000. The reports ordinary income of $120,000 after deducting the guaranteed payment. Distributive shares for the three partners are tentatively reported as: Steve, $72,000; Tracy, $24,000; and Vicki, $24,000. What is the proper distributive share of income for each partner?
Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...