The partnership of Felix and Oscar had the following items
of income during the taxable year ended December 31, 2012.

Income from operations $156,000

Tax-exempt interest income 8,000

Dividends from foreign corporations 6,000

Net rental income 12,000

What is the total ordinary income of the partnership for 2012?

(a) The requirement is to determine the ordinary income
of the partnership. Income from operations is considered
ordinary income. The net rental income and the dividends from
foreign corporations are separately allocated to partners and
must be excluded from the computation of the partnership’s
ordinary income. Tax-exempt income remains tax-exempt and
must also be excluded from the computation of ordinary income.
Thus, ordinary income only consists of the income from operations
of $156,000.