Rita, a calendar year taxpayer, is an employee of the RST Partnership, which has a June 30 year-end. The partnership pays Rita a salary of $2,500 per month for the period January 1 through June 30, 2016. On July 1, 2016, she joins the partnership and receives monthly drawings (distributions) of $2,500 for the 12-month period ending June 30, 2017. The drawings reflect her approximate share of partnership income for the period July 1, 2016, through June 30, 2017. On June 30, 2017, Rita’s share of partnership ordinary income is $40,000.
a. What amount of income does Rita report on her 2016 individual tax return?
b. What amount of income does Rita report on her 2017 individual tax return?
c. Which part (if any) of Rita’s income is subject to Social Security taxes?