C is corrent. Income from operations is considered ordinary income and as such would be included in the calculation. Tax-exempt interest, dividends, and net rental income must be separately stated and allocated to the partners and are thus excluded from the computation of ordinary income. Therefore, total ordinary income for the partnership is $156,000. A is incorrect. Net rental income must be separately stated on Schedule K because a rental activity is a passive activity. B is incorrect. Tax-exempt interest must be separately stated on Schedule K. D is incorrect. Dividends must be separately stated on Schedule K.
