A partnership in which a parent transferred a $40\%$ interest by gift to a child generated a profit of $$202,500.$ Capital is a material income$-$Exercise $10-21($Algorithmic$)($L$0.6,7)$

This year, the Tastee Partnership reported income before guaranteed payments of $$112,500.$ Stella owns a $10\%$ profits interest and works

$1,660$ hours per year in the business. Euclid owns a $90\%$ profits interest $($with a basis of $$30,000$ at the beginning of the tax year$)$ and

performs no services for the partnership during the year. For services performed during the year, Stella receives a "salary" of $$5,625$ per

month. Euclid withdrew $$11,250$ from the partnership during the year as a normal distribution of cash from Tastee $($i$.$e$.,$ not for services$).$

If required, round your answers to the nearest dollar.

a$.$ What is the amount of guaranteed payments made by the partnership this year?

$

b$.$ How much is the partnership's ordinary income after any permitted deduction for guaranteed payments?

$

c$.$ How much income will Stella report?

$

d$.$ How much income will Euclid report?

$

producing factor. The parent performed services valued at $$60,750.$ The child performed no services.

How much income is allocated to the parent for services and for use of capital?

Compensation for services: $

Use of capital: $

In addition, $

of income is allocated to the child.