Exam 10: Special Partnership Issues

Before receiving a liquidating distribution,Kathy's basis in her interest in the KLM Partnership is $30,000.The distribution consists of $5,000 in money,inventory having a $1,000 basis to the partnership and a $2,000 FMV,and two parcels of undeveloped land (not held as inventory)having basis of $3,000 and $9,000 to the partnership with FMVs of $5,000 and $12,000,respectively.What is Kathy's basis in each parcel of land?

Tony sells his one-fourth interest in the WindyCity Partnership to Bill for $100,000 cash when the partnership's assets are as follows: Assets Basis Fair Market Value Cash \ 80,000 \ 80,000 Unrealized receivables 0 72,000 Inventory 80,000 184,000 Land Total \ 400,000 The partnership has no liabilities on the sale date.Tony's basis in his partnership interest on the date of the sale is $60,000.What are the amount and character of Tony's gain?

Kenya sells her 20% partnership interest having a $28,000 basis to Ebony for $40,000 cash.At the time of the sale,the partnership has no liabilities and its assets are as follows: Basis FMV Cash \ 20,000 \ 20,000 Unrealized receivables 0 40,000 Inventory 10,000 40,000 Land (Sec. 1231) 110,000 100,00 Kenya and Ebony have no agreement concerning the allocation of the sales price.Ordinary income recognized by Kenya as a result of the sale is

Which of the following statements is correct?

Sally is a calendar-year taxpayer who owns a 30% capital and profits interest in the SEM Partnership.Eric sells the remaining 70% capital and profits interest to Michelle on October 3.The partnership year-end is March 31 as permitted by the IRS for business purposes.Which of the following statements is correct?

What is the definition of "substantially appreciated inventory"?

For Sec.751 purposes,"substantially appreciated inventory" means property held for sale to customers whose market value exceeds its adjusted basis.

Can a partner recognize both a gain and a loss on the sale of a partnership interest? If so,under what conditions?

What conditions are required for a partner to recognize a loss upon receipt of a distribution from a partnership?

Marc is a calendar-year taxpayer who owns a 30% capital and profits interest in the MN Partnership.Nancy sells the remaining 70% capital and profits interest to Henry on October 31.The partnership year-end is March 31 as permitted by the IRS for business purpose reasons.The MN Partnership

Susan contributed land with a basis of $6,000 and an FMV of $10,000 to the SH Partnership two years ago to acquire her partnership interest.This year,the land is distributed to Harry when its FMV is $11,000.No other distributions have been made since Susan became a partner.When the land is distributed,the partnership's basis in the land immediately before distribution is increased by

Identify which of the following statements is true.

John has a basis in his partnership interest of $30,000.He receives a current distribution of $6,000 cash,unrealized receivables (FMV $11,000,basis $10,000),inventory (FMV $8,000,basis $4,000),and investment land (FMV $7,000,basis $6,000).The partners' relative interest in the Sec.751 assets do not change as a result of the current distribution.His basis in the land is

Mirabelle contributed land with a $5,000 basis and a $9,000 FMV to MS Partnership four years ago.This year the land is distributed to Sergio,another partner in the partnership.At the time of distribution,the land had a $12,000 FMV.How much gain should Mirabelle and Sergio recognize?

Identify which of the following statements is true.

The sale of a partnership interest always results in capital gain or loss rather than ordinary income.

A partner can recognize gain,but not loss,on a liquidating distribution.

Which of the following is a valid reason for making a 754 election?

The Internal Revenue Code includes which of the following assets in the definition of Sec.751 properties?

Identify which of the following statements is true.