Question 1

Which of the following is a disadvantage of an LLC?

Accepted Answer

A) For security law purposes,an ownership interest in an LLC is not necessarily a security. 
B) There is no general partner requirement. 
C) Taxable income and losses pass through to the owners. 
D) The states are not uniform in their treatment of limited liability companies. 
A) For security law purposes,an ownership interest in an LLC is not necessarily a security. 
B) There is no general partner requirement. 
C) Taxable income and losses pass through to the owners. 
D) The states are not uniform in their treatment of limited liability companies.

Question 2

A partnership generally must adopt the same tax year as its majority partners.

Accepted Answer

A) True 
 B)False

Question 3

Lucky's original contribution to the Boxwood Partnership was land with a basis of $5,000 and a market value of $55,000.Her share of the taxable income from the partnership since her original contribution has been $95,000 and Lucky has received $50,000 in cash distributions from the partnership.Lucky did not recognize any gains as a result of the distributions.Calculate Lucky's current basis in her partnership interest.

Accepted Answer

$50,000 =

Question 4

The partnership of Truman and Hanover realized the following items of income during the year ended December 31,2013: Net income from operations $\quad$$\quad$$\quad \$ 62,000$
Dividends from domestic corporations $\quad \$ 4,000$
Interest on corporate bonds$\quad$$\quad$ $\$ 3,000$
Net long-term capital gains $\quad$$\quad$$\$ 5,000$
Net short-term capital gains$\quad$ $\quad \$ 1,000$ 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 2013?

Accepted Answer

A) $62,000 
B) $65,000 
C) $69,000 
D) $70,000 
E) None of the above 
A) $62,000 
B) $65,000 
C) $69,000 
D) $70,000 
E) None of the above

Question 5

Losses are disallowed for transactions between a partnership and a partner who has a 50 percent interest in the partnership.

Accepted Answer

A) True 
 B)False

Question 6

Jennifer has a 25 percent interest in the Aspen Aircraft partnership.Her basis in her partnership interest is
$10,000 at the beginning of 2013.The partnership reported the following activity for 2013: $\begin{array}{lc}
\text { Ordinary income}&\$40,000\
\text { Section 1231 gain}&\$10,000\\text { Charitable contribution }&\$12,000\\text { Total distributions to partners }&\$20,000
\end{array}$
 What is Jennifer's basis in her partnership interest at the end of 2013?

Accepted Answer

$14,500 = $10,000 +

Question 7

On July 1,2013,Bertram acquired a 30 percent interest in Sycamore Company,a partnership,by contributing property with an adjusted basis of $6,000 and a fair market value of $12,000.The property was subject to a mortgage of $8,000,which was assumed by Sycamore Company.What is Bertram's basis in his partnership interest in Sycamore Company immediately after the partnership contribution?

Accepted Answer

A) $400 
B) $3,600 
C) $6,400 
D) $8,400 
E) None of the above 
A) $400 
B) $3,600 
C) $6,400 
D) $8,400 
E) None of the above

Question 8

Sabrina contributes a building with an adjusted basis of $40,000 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?

Accepted Answer

A) $0 
B) $40,000 
C) $80,000 
D) $100,000 
E) None of the above 
A) $0 
B) $40,000 
C) $80,000 
D) $100,000 
E) None of the above

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Guaranteed payments made by a partnership must be made to individuals other than partners in the partnership.

Accepted Answer

A) True 
 B)False

Question 11

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 10th.
b.On July 13th,the partnership sells its office building and moves its business across town.
c.June buys a 15 percent interest in the partnership on May 14th.
d.The partnership goes out of business on February 26th.

Accepted Answer

a.The partnership's tax year-end is Augu

Question 12

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?

Accepted Answer

A) $25,000 
B) $35,000 
C) $65,000 
D) $70,000 
E) None of the above 
A) $25,000 
B) $35,000 
C) $65,000 
D) $70,000 
E) None of the above

Question 13

If Margo and Bruce purchase and operate an ice cream store,for tax purposes they have formed a partnership.

Accepted Answer

A) True 
 B)False

Question 14

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.
 $\begin{array}{ll}
\text { Gross income from operations } & \$ 135,000 \
\text { Gain on sale of antique abacus (a business asset) } & \$ 5,000 \
\text { Interest income from business bank account } & \$ 100\\text { Deductions: }\\text { Salaries to employees } & \$ 65,000 \
\text { Payroll taxes } & \$ 5,000 \
\text { Rent } & \$ 7,000 \
\text { Depreciation } & \$ 3,500 \
\text { Contribution to United Way charity } & \$ 2,000\\text { Foreign tax paid on overseas business deals }&\$3,000\\text { Distributions to the partners }&\$40,000
\end{array}$ 
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?

Accepted Answer

@#IMG-DLM& c.It is due on Apri

Question 15

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 the partnership's basis in the building contributed by Rita?

Accepted Answer

A) $55,000 
B) $60,000 
C) $90,000 
D) $150,000 
E) None of the above 
A) $55,000 
B) $60,000 
C) $90,000 
D) $150,000 
E) None of the above

Question 16

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?

Accepted Answer

a.$0.He still has a $5,000 bas

Question 17

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?

Accepted Answer

a.Partnership income and expenses are re

Question 18

A partnership must separately report Section 1231 gains and losses rather than including them in ordinary taxable income.

Accepted Answer

A) True 
 B)False

Question 19

Salix Associates is a partnership with an October 31 year-end.For the fiscal year ended October 31,2013,Salix Associates reported ordinary income of $100,000,after deducting guaranteed payments.Max,a calendar year taxpayer,is a 30 percent partner in the partnership and received $2,000 monthly as a guaranteed payment for the calendar year 2012,and $2,100 monthly for the calendar year 2013.What is the total income from the partnership that Max should report on his 2013 individual income tax return?

Accepted Answer

A) $30,000 
B) $54,200 
C) $55,000 
D) $55,200 
E) None of the above 
A) $30,000 
B) $54,200 
C) $55,000 
D) $55,200 
E) None of the above

Question 20

Which of the following items must be reported separately from ordinary income or loss on a partnership return?

Accepted Answer

A) Capital losses 
B) Miscellaneous income 
C) Cost of goods sold 
D) Sales income 
E) None of the above 
A) Capital losses 
B) Miscellaneous income 
C) Cost of goods sold 
D) Sales income 
E) None of the above

Which of the following is a disadvantage of an LLC?

A partnership generally must adopt the same tax year as its majority partners.

Losses are disallowed for transactions between a partnership and a partner who has a 50 percent interest in the partnership.

Sabrina contributes a building with an adjusted basis of $40,000 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?

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

Guaranteed payments made by a partnership must be made to individuals other than partners in the partnership.

If Margo and Bruce purchase and operate an ice cream store,for tax purposes they have formed a partnership.

A partnership must separately report Section 1231 gains and losses rather than including them in ordinary taxable income.

Which of the following items must be reported separately from ordinary income or loss on a partnership return?

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

Which of the following is a disadvantage of an LLC?

A partnership generally must adopt the same tax year as its majority partners.

Losses are disallowed for transactions between a partnership and a partner who has a 50 percent interest in the partnership.

Sabrina contributes a building with an adjusted basis of $40,000 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?

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

Guaranteed payments made by a partnership must be made to individuals other than partners in the partnership.

If Margo and Bruce purchase and operate an ice cream store,for tax purposes they have formed a partnership.

A partnership must separately report Section 1231 gains and losses rather than including them in ordinary taxable income.

Which of the following items must be reported separately from ordinary income or loss on a partnership return?

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