Meg and abby are equal partners in the am partnership, which earns $40,000 ordinary income, $6,000 longminusterm capital gain (ltcg), and $2,000 sec. 1231 loss during the current year. what is the amount and character of income that must be reported on abby's tax return for this year's partnership operations?

$20,000 ordinary income, $3,000 LTCG, $1,000 Sec. 1231 loss

Explanation:

Since Meg and Abby are equal partners in the AM Partnership, which earns $40,000 ordinary income, $6,000 longminusterm capital gain (LTCG), and $2,000 Sec. 1231 loss during the current year.  As an equal partner, Abby receives a 50% share of all the income/loss items from the two partner partnership.  The answer is   $20,000 ordinary income, $3,000 LTCG, $1,000 Sec. 1231 loss

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