Exam 10: Special Partnership Issues

The ABC Partnership owns the following assets on December 31. Basis FMV Cash \ 20,000 \ 20,000 Unrealized receivables 0 40,000 Inventory \ 20,000 30,000 Land (Sec. 1231 asset) 50,000 90,000 The indication that ABC owns substantially appreciated inventory is

Identify which of the following statements is true.

If a partner dies,his or her tax year closes

If a partnership chooses to form an LLC,under the check-the-box rules,and assuming no elections are made,the entity will be taxed as

Derrick's interest in the DEF Partnership is liquidated when his basis in the interest is $30,000.He receives a liquidating distribution of $20,000 cash and inventory with a basis of $8,000 and an FMV of $30,000.Derrick will recognize

Bart has a partnership interest with a $32,000 basis.He receives a current distribution of $6,000 cash,unrealized receivables (FMV $9,000,basis $10,000),inventory (FMV $8,000,basis $4,000),investment land (FMV $7,000,basis $4,000),and building (FMV $20,000,basis $8,000).No depreciation recapture applies with respect to the building.The partners' relative interests in the Sec.751 assets do not change as a result of the current distribution.Bart's basis in the building is

Identify which of the following statements is true.

For tax purposes,a partner who receives retirement payments ceases to be regarded as a partner

When a retiring partner receives payments that exceed the value of that partner's partnership property,the excess payment is a guaranteed payment.

The definition of "inventory" for purposes of Sec.751 includes

Under Sec.751,unrealized receivables include potential Section 1245 or 1250 recapture on the partnership's depreciable property.

Ten years ago,Latesha acquired a one-third interest in Dana Associates,a partnership,for $26,000 cash.This year,Latesha's entire interest in the partnership is liquidated when her basis is $24,000.Dana's assets consist of the following: cash,$20,000; inventory with a basis of $46,000 and an FMV of $40,000.Dana has no liabilities.Latesha receives the cash of $20,000 in liquidation of her entire interest.What is Latesha's recognized loss on the liquidation of her interest in Dana?

For purposes of Sec.751,inventory includes all of the following except

Under the check-the-box rules,an LLC with more than one member is taxed as a partnership unless it elects to be taxed as a corporation.

Identify which of the following statements is true.

If a distribution occurs within ________ years of the contribution date,in a nonliquidating distribution that does not qualify for Sec.751 treatment,the distribution event may trigger a precontribution gain or loss.