On January 1, 20X1, C made a gift of 25% interest in the Mariner Partnership to his son, P. The partnership\'s business was bookkeeping--: capital was NOT a material income producing factor. P had no interest in working as a bookkeeper. C, who retained a 35% interest, and X the other partner, performed all the work. A reasonable salary for C was $20,000 and for X was $10,000, which they received as guaranteed payments. During 20x1, Mariner had a profit of $130,000 before any quaranteed payments. How much income should P include in his return for 20X1? A. 0 B.$25,000 C. $30,000 or D. $32,500 Solution Profits after guaranteed payments to partners = 130000 - 10000 - 20000 = 100000 P\'s share of partnership income = 100000 * 25% = 25000 Hence P should file a profit from partnership of 25000.