Exam 10: Partnership Taxation

Jamie decides to contribute cash and property to a partnership she and her friends started. She contributes a building worth $260,000 that has an adjusted basis of $100,000 and she also contributes $40,000 in cash. What is her basis in the partnership?

Which of the following liabilities would be considered nonrecourse?

List three advantages of an LLC.

Wallace and Pedersen have equal interests in the capital and profits of the partnership of Wallace and Pedersen, but are otherwise unrelated. On August 1, 2015, Wallace sold 100 shares of Kalmia Mining Corporation to the partnership for its fair market value of $7,000. Wallace had bought the stock in 2000 at a cost of $10,000. What is Wallace's deductible loss for 2015 as a result of the sale of this stock?

J. Bean and D. Counter formed a partnership. During the current year, the partnership had the following income and expenses: ​ a.Calculate the net ordinary income. b.List all of the other items that need to be separately reported. c.If the partnership is on a calendar year tax basis, when is the partnership tax return due?

Sabrina contributes a building with an adjusted basis of $80,000 to a partnership. The fair market value of the building is $100,000 on the date of the contribution. What is Sabrina's basis in her partnership interest immediately after the contribution?

An equal partnership is formed by Rita and Gerry. Rita contributes cash of $10,000 and a building with a fair market value of $150,000, adjusted basis of $55,000, and subject to a liability of $60,000. Gerry contributes cash of $100,000. What is Rita's basis in her partnership interest immediately after formation of the partnership?

The partnership of Truman and Hanover realized the following items of income during the year ended December 31, 2015: Both the partners are on a calendar year basis. What is the total income which should be reported as ordinary income from business activities of the partnership for 2015?

Jerry receives cash of $15,000 and a building with a fair market value of $50,000 (adjusted basis of $30,000) in a current distribution. a.Assuming his basis in his partnership interest was $50,000, what amount of gain must Jerry recognize as a result of the current distribution? b.Assuming his basis in his partnership interest was $10,000, what amount of gain must Jerry recognize as a result of the current distribution?

Please answer the following questions: a.What form is used to report income and expenses from a partnership? b.If a partner's basis at the beginning of the year is $1,000 and the partnership allocates $7,000 of loss to the partner: how much of the loss is deductible in the current year; what is his new basis in the partnership; and what happens to any excess loss not deducted? c.What is the exemption amount for a partnership?

Kitty is a 60 percent partner of Tabby Associates. Kitty sells a building to the partnership for $75,000. If the building had an adjusted basis to Kitty of $95,000, how much gain or loss does Kitty recognize on this transaction?

An equal partnership is formed by Rita and Gerry. Rita contributes cash of $10,000 and a building with a fair market value of $150,000, adjusted basis of $55,000, and subject to a liability of $60,000. Gerry contributes cash of $100,000. What amount of gain must Rita recognize as a result of this transaction?

Which one of the following is not true about partnerships?

A partnership reports its income on Form 1040.

A partnership may deduct a single personal exemption in calculating ordinary taxable income or loss.

Assuming that a partnership normally has a calendar year-end, what should the tax year-end be in the following independent cases? ​ a.Jim, a 70 percent partner, sells his partnership interest to Fred on August 10. b.On July 13, the partnership sells its office building and moves its business across town. c.June buys a 15 percent interest in the partnership on May 14. d.The partnership goes out of business on February 26.

Phil and Bill each own a 50 percent interest in P&B Interests. P&B Interests has ordinary income for the year of $35,000 before guaranteed payments to Phil. If Phil receives guaranteed payments of $20,000 during the tax year, what is the total income or loss that should be reported by Bill from the partnership for this tax year?

Cooke and Thatcher form the C&T Partnership. Cooke contributes equipment with a fair market value of $70,000 and a basis of $35,000, in exchange for an 70 percent interest in the partnership capital and profits. Thatcher performs services worth $30,000 for the partnership in exchange for a 30 percent interest in capital and profits. a.What is the amount of Cooke's recognized gain or loss (if any) as a result of the contribution to the partnership in exchange for the partnership interest? b.What is Cooke's basis in his partnership interest immediately after the contribution? c.What is the amount of Thatcher's recognized income or loss (if any) on the contribution to the partnership? d.What is Thatcher's basis in her partnership interest immediately after the contribution? e.What is C&T Partnership's basis in the equipment received from Cooke?

Barbara receives a current distribution consisting of $2,000 cash plus other property with an adjusted basis to the partnership of $2,300 and a fair market value on the date of the distribution of $7,000. Barbara has a 10 percent interest in the partnership and her basis in her partnership interest, immediately prior to the distribution, is $5,000. What is Barbara's basis in the non-cash property received in the current distribution?

The basis of a partner's interest in a partnership is increased by losses of the partnership allocated to the partner.