Partnership Formation & Basis Adjustments 

1quired:

d. Using the operating results, what are Slicenhook's ordinary income and separately stated items for 2025 and 2026? What amount of Slicenhook's income for each period would each of the partners receive?

. Calculating Ordinary Income (2025) We take gross profit and subtract standard operating costs:

• Sales: $\$1,230,000$

• Less COGS: $(\$428,000)$

• Less Expenses & Depr.: $(\$270,000)$

• Less Interest Expense: $(\$133,000)$

• Total Partnership Ordinary Income: $\mathbf{\$401,000}$

2. Identifying Separately Stated Items These pass through to the partners' individual tax returns:

• Qualified Dividends: $\$1,890$

• Tax-Exempt Interest: $\$1,030$

• Section 179 Expense: $\$39,000$ (Massive for 2025!)

3. The Partner's Share (1/3 Split) Each partner reports their exact percentage of every line item. For example, in 2025:

• Ordinary Income: $\$401,000 \div 3 = \mathbf{\$133,667}$

• Distributions: $\$300,000 \div 3 = \mathbf{\$100,000}$ (Cash received)