Exam 33: Partnerships and S Corporations

Priya is a partner in a partnership.The partnership has incurred a loss for the year.Priya's ability to recognize the loss will be tested in the following order:

S corporations and their shareholders are subject to the rules regarding

An S corporation can have both voting and nonvoting common stock as long as the shares of stock have identical rights to share in the profits and assets of the corporation.

A partner in a partnership will deduct her qualified business income deduction as a deduction for AGI.

A new corporation is formed on January 2,2019.In order to have the S election effective as of the first day of the first tax year,the Form 2553 must be filed no later than

The transfer of property to a partnership in exchange for a partnership interest will generally be a nontaxable event.

Members of a single family may be counted as one shareholder for S corporation purposes.

Lars has a basis in his partnership interest in XXL of $100,000.He sells the partnership interest in XXL for $160,000.XXL is a cash-basis partnership which has accounts receivable with a $30,000 fair market value and a zero adjusted basis.Lars's share of these receivables is $10,000.What is the amount and character of the gain that Lars recognizes on the sale of his partnership interest?

Clark and Lois formed an equal partnership three years ago.Clark contributed cash of $160,000 while Lois contributed land with a $90,000 adjusted basis and a $160,000 FMV.Three years later the land is sold for $210,000.The tax results to Clark and Lois are

Edith contributes land having $100,000 FMV and a $85,000 adjusted basis,which is subject to a $66,000 mortgage in exchange for a one-third interest in the EHK Partnership.The partnership owes no other liabilities.After the contribution,Kate,Edith,and Helen share profits and losses equally and each has a one-third interest in the partnership capital.Assume that Kate has a basis in her partnership interest of $50,000 before Edith's contribution to the partnership.The effect of Edith's contribution on partner Kate's basis is to

If a partner contributes property to a partnership,and that property is subject to a liability,the noncontributing partners increase the basis of their partnership interests by their share of the partnership liabilities that were transferred to the partnership.

Patrick acquired a 50% interest in a partnership by contributing property that had an adjusted basis of $8,000 and a fair market value of $29,000.The property was subject to a liability of $22,000,which the partnership assumed for legitimate business purposes.Which of the following statements is correct?

Treasury Regulations require maintenance of partnership capital accounts under book accounting principles rather than tax accounting principles.The capital accounts will be maintained following GAAP accounting standards.

The primary purpose of a partnership tax return is to determine the income,deduction,loss and credit items of the partnership and thus the amounts that should be reported by the individual partners.

Stephanie owns a 25% interest in a qualifying S corporation.Stephanie's basis in the stock was $40,000 at the beginning of the year.Stephanie made no capital contributions and received no distributions during the year.Stephanie loaned the S corporation $10,000 this year.The S corporation incurred a $240,000 ordinary loss this year.Stephanie's deduction and carryover of the unused loss are

Which of the following statements is correct,assuming that an extension is not requested?

David and Joycelyn form an equal partnership in the current year.No special allocation is provided for in the partnership agreement.During the year David contributes land having a $90,000 basis and a $100,000 FMV in exchange for the initial partnership interest.In addition,the partnership earns $50,000 of ordinary income while partnership liabilities increase from zero to $30,000 by the end of the tax year.The partnership earns $20,000 of tax-exempt interest during the year.David's basis at the end of the current year is

Tony is the 100% shareholder of a corporation established five years ago.It has always been an S corporation.After adjustment for this year's corporate income,but before taking distributions into account,Tony has a $50,000 stock basis.The corporation pays Tony a $40,000 cash distribution.As a result of this distribution,Tony will have an ending stock basis and recognized income of

Jamahl has a 65% interest in a partnership.Jamahl sells land to the JK partnership for $70,000.Prior to the sale,the land had a FMV of $70,000 and an adjusted basis of $90,000 to Jamahl.Two years later,the partnership sells the land for $123,000.Due to the sale,the partnership will recognize

JK Partnership earns $30 million of non-interest ordinary income.The partnership incurs $12 million of interest expense.Jen and Kai are each 50% partners,sharing all partnership items equally.Assume no taxpayer qualifies for the small business exception.The partnership's ordinary income,after taking interest expense into account,will be