Question 1

A partnership reports its income on Form 1040.

Accepted Answer

A) True 
 B)False  False

Question 2

There is no general partner required in a limited liability company LLC).

Accepted Answer

A) True 
 B)False  True

Question 3

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

Accepted Answer

A) $300,000 
B) $100,000 
C) $260,000 
D) $140,000 
E) None of the above is correct 
A) $300,000 
B) $100,000 
C) $260,000 
D) $140,000 
E) None of the above is correct D

Question 4

Jordan files his income tax return on a calendar-year basis.He is the principal partner of a partnership reporting on a June 30 fiscal year end basis.Jordan's share of the partnership's ordinary income was $24,000 for the fiscal year ended June 30,2013,and $72,000 for the fiscal year ended June 30,2014.How much should Jordan report on his 2013 individual income tax return as his share of taxable income from the partnership?

Accepted Answer

A) $24,000 
B) $36,000 
C) $48,000 
D) $72,000 
E) None of the above 
A) $24,000 
B) $36,000 
C) $48,000 
D) $72,000 
E) None of the above

Question 5

Which of the following is true about an LLC Limited Liability Company)?

Accepted Answer

A) An LLC is always treated like a corporation for tax purposes. 
B) An LLC must have at least two members. 
C) An LLC is always taxed like a partnership. 
D) An LLC's limited liability is similar to a corporation's. 
E) All of the above are false. 
A) An LLC is always treated like a corporation for tax purposes. 
B) An LLC must have at least two members. 
C) An LLC is always taxed like a partnership. 
D) An LLC's limited liability is similar to a corporation's. 
E) All of the above are false.

Question 6

Jim's basis in his partnership is $200,000.His share of the 2013 income is $60,000.The partnership gave him a $75,000 distribution in 2013.What is his new basis in the partnership and what is his taxable income?

Accepted Answer

A) $200,000;$75,000 
B) $200,000;$60,000 
C) $140,000;$60,000 
D) $185,000;$60,000 
E) $125,000;$75,000 
A) $200,000;$75,000 
B) $200,000;$60,000 
C) $140,000;$60,000 
D) $185,000;$60,000 
E) $125,000;$75,000

Question 7

Because a partnership does not pay taxes,a partnership is not recognized as a legal entity under civil law.

Accepted Answer

A) True 
 B)False

Question 8

Losses on transactions between a partnership and its partners are always disallowed.

Accepted Answer

A) True 
 B)False

Question 9

Lilac Designs is a partnership with a tax year that ends November 30,2013.During that year,William,a partner,received $5,000 per month as a guaranteed payment and his share of partnership income after guaranteed payments was $20,000.For December of 2013,William received a guaranteed payment of
$10,000.Calculate the amount of income from the partnership that William should report for his tax year ended December 31,2013.

Accepted Answer

$80,000 =

Question 10

During 2013,Norman contributed investment property held for over one year to the Mary Ann Partnership for a 40 percent interest in partnership capital and profits.His tax basis in the property contributed was $8,000,and the property had a fair market value of $10,000 on the date of the contribution to the partnership.What gain or loss should Norman report as a result of the contribution of the property to the partnership in exchange for the 40 percent partnership interest?

Accepted Answer

A) No gain or loss 
B) $2,000 long-term capital gain 
C) $2,000 ordinary income 
D) $10,000 long-term capital gain 
E) None of the above 
A) No gain or loss 
B) $2,000 long-term capital gain 
C) $2,000 ordinary income 
D) $10,000 long-term capital gain 
E) None of the above

Question 11

Which one of the following is not true about partnerships and their income-reporting process?

Accepted Answer

A) The partnership must file a Form 1065. 
B) The partner's share of income/loss is presented on Schedule K-1. 
C) A partner's deductible loss is limited to his basis in the partnership. 
D) The partnership pays income tax. 
E) All of the above are true. 
A) The partnership must file a Form 1065. 
B) The partner's share of income/loss is presented on Schedule K-1. 
C) A partner's deductible loss is limited to his basis in the partnership. 
D) The partnership pays income tax. 
E) All of the above are true.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Debbie and Betty operate the D & B partnership.Betty,a 50 percent partner,receives a guaranteed
payment of $10,000 for her services in operating the partnership.The partnership has income before the guaranteed payment of $5,000.What is the taxable income Debbie and Betty must each report from the partnership for the year?
Debbie should report income of $ .Betty should report income of $ .

Accepted Answer

Debbie: $2,500 loss = 50% * $5

Question 14

The "at-risk" rule does not apply to activities involving real estate.

Accepted Answer

A) True 
 B)False

Question 15

Ownership of a partnership interest by a taxpayer's brother is considered indirect ownership by the taxpayer.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statement is true about partnerships?

Accepted Answer

A) The formation of a partnership must be documented in writing. 
B) An LLC is generally treated as a partnership for tax law purposes. 
C) General partners have no liability for partnership obligations beyond their capital contributions. 
D) When Sue and Billy Bob invest in land together,they are considered to have formed a partnership. 
A) The formation of a partnership must be documented in writing. 
B) An LLC is generally treated as a partnership for tax law purposes. 
C) General partners have no liability for partnership obligations beyond their capital contributions. 
D) When Sue and Billy Bob invest in land together,they are considered to have formed a partnership.

Question 17

Which of the following statements about partnerships is true?

Accepted Answer

A) Partnerships must file their tax returns on a calendar year basis. 
B) No gain or loss is ever recognized in transactions between partners and a partnership. 
C) Gain is never recognized by a partner on a contribution of property to a partnership. 
D) A partner's original basis in a partnership interest is equal to the basis of the property transferred plus cash contributed)to the partnership,adjusted for any gain recognized on the transfer and reduced for liabilities assumed by the other partners. 
E) The partnership's basis in property contributed by a partner is equal to the fair market value of the property on the date of the transfer. 
A) Partnerships must file their tax returns on a calendar year basis. 
B) No gain or loss is ever recognized in transactions between partners and a partnership. 
C) Gain is never recognized by a partner on a contribution of property to a partnership. 
D) A partner's original basis in a partnership interest is equal to the basis of the property transferred plus cash contributed)to the partnership,adjusted for any gain recognized on the transfer and reduced for liabilities assumed by the other partners. 
E) The partnership's basis in property contributed by a partner is equal to the fair market value of the property on the date of the transfer.

Question 18

A partnership may not show a loss as a result of deducting guaranteed payments made to the partners.

Accepted Answer

A) True 
 B)False

Question 19

Under which of the following circumstances would a partnership terminate and close its tax year?

Accepted Answer

A) Divorce of a partner 
B) Sale of an interest in a partnership by a partner who holds a 60 percent capital and profits interest 
C) Entry of a new partner 
D) Distribution of property to a 10 percent partner in complete termination of the partner's interest in the partnership 
E) None of the above 
A) Divorce of a partner 
B) Sale of an interest in a partnership by a partner who holds a 60 percent capital and profits interest 
C) Entry of a new partner 
D) Distribution of property to a 10 percent partner in complete termination of the partner's interest in the partnership 
E) None of the above

Question 20

Leslie contributes a building worth $88,000,with an adjusted basis of $38,000,to a partnership in exchange for a 50 percent interest in the partnership's capital and profits.What is the amount of Leslie's basis in her partnership interest immediately after the contribution?

Accepted Answer

A) $38,000 
B) $44,000 
C) $50,000 
D) $88,000 
E) None of the above 
A) $38,000 
B) $44,000 
C) $50,000 
D) $88,000 
E) None of the above

A partnership reports its income on Form 1040.

There is no general partner required in a limited liability company LLC).

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

Which of the following is true about an LLC Limited Liability Company)?

Jim's basis in his partnership is $200,000.His share of the 2013 income is $60,000.The partnership gave him a $75,000 distribution in 2013.What is his new basis in the partnership and what is his taxable income?

Because a partnership does not pay taxes,a partnership is not recognized as a legal entity under civil law.

Losses on transactions between a partnership and its partners are always disallowed.

Which one of the following is not true about partnerships and their income-reporting process?

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

The "at-risk" rule does not apply to activities involving real estate.

Ownership of a partnership interest by a taxpayer's brother is considered indirect ownership by the taxpayer.

Which of the following statement is true about partnerships?

Which of the following statements about partnerships is true?

A partnership may not show a loss as a result of deducting guaranteed payments made to the partners.

Under which of the following circumstances would a partnership terminate and close its tax year?

Leslie contributes a building worth $88,000,with an adjusted basis of $38,000,to a partnership in exchange for a 50 percent interest in the partnership's capital and profits.What is the amount of Leslie's basis in her partnership interest immediately after the contribution?

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Business Income and Expenses, Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 10: Partnership Taxation

A partnership reports its income on Form 1040.

There is no general partner required in a limited liability company LLC).

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

Which of the following is true about an LLC Limited Liability Company)?

Jim's basis in his partnership is $200,000.His share of the 2013 income is $60,000.The partnership gave him a $75,000 distribution in 2013.What is his new basis in the partnership and what is his taxable income?

Because a partnership does not pay taxes,a partnership is not recognized as a legal entity under civil law.

Losses on transactions between a partnership and its partners are always disallowed.

Which one of the following is not true about partnerships and their income-reporting process?

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

The "at-risk" rule does not apply to activities involving real estate.

Ownership of a partnership interest by a taxpayer's brother is considered indirect ownership by the taxpayer.

Which of the following statement is true about partnerships?

Which of the following statements about partnerships is true?

A partnership may not show a loss as a result of deducting guaranteed payments made to the partners.

Under which of the following circumstances would a partnership terminate and close its tax year?

Leslie contributes a building worth $88,000,with an adjusted basis of $38,000,to a partnership in exchange for a 50 percent interest in the partnership's capital and profits.What is the amount of Leslie's basis in her partnership interest immediately after the contribution?

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Business Income and Expenses, Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

The Corporate Income Tax

Tax Administration and Tax Planning

Filters