Question 1

Identify which of the following statements is true.

Accepted Answer

A)  The contribution of Sec. 1245 property to a partnership triggers recognition of ordinary income by the contributor at the time of the transfer. 
B)  When a partnership interest is given to a partner in exchange for services, the partnership can deduct or capitalize the FMV of the services, depending on the nature of the services. 
C)  A partner may not recognize ordinary income when receiving a capital and profits interest in a partnership in exchange for services. 
D)  All of the above are false. 
A)  The contribution of Sec. 1245 property to a partnership triggers recognition of ordinary income by the contributor at the time of the transfer. 
B)  When a partnership interest is given to a partner in exchange for services, the partnership can deduct or capitalize the FMV of the services, depending on the nature of the services. 
C)  A partner may not recognize ordinary income when receiving a capital and profits interest in a partnership in exchange for services. 
D)  All of the above are false.

Question 2

Stella acquired a 25% interest in the STUV Partnership by contributing land having an adjusted basis of $32,000 and a fair market value of $100,000. The land was subject to a $48,000 mortgage, which was assumed by STUV. No other liabilities existed at the time of contribution. What is Stella's basis in her partnership interest?

Accepted Answer

A)  $0 
B)  $52,000 
C)  $32,000 
D)  $64,000 
A)  $0 
B)  $52,000 
C)  $32,000 
D)  $64,000

Question 3

On January 1, Helmut pays $2,000 for a 10% capital, profits, and loss interest in a partnership, which has recourse liabilities of $20,000. The partners share economic risk of loss from recourse liabilities in the same way they share partnership losses. In the same year, the partnership incurs losses of $6,000 and the recourse liabilities increase by $5,000. Helmut and the partnership use a calendar tax year- end. Helmut's basis at year- end is

Accepted Answer

A)  $3,500. 
B)  $1,500. 
C)  $3,900. 
D)  $2,000. 
A)  $3,500. 
B)  $1,500. 
C)  $3,900. 
D)  $2,000.

Question 4

Identify which of the following statements is true.

Accepted Answer

A)  Valid family partnership partners may be subject to the "kiddie tax." 
B)  Bob gives his 16- year- old daughter Michelle a 20% capital and profits interest in his accounting practice. She does no work for the partnership and is not involved at all with the operations of the partnership. In fact, she does not know that her dad transferred the interest in the partnership to her. If the partnership allocates an $8,000 distributive share of ordinary income to her, it is properly reported on Michelle's individual tax return. 
C)  Joan gives her daughter, Sarah, a 25% interest in a partnership that operates a steel mill. Sarah, age 19, was allocated $20,000 from the partnership as her share of the partnership ordinary income. The IRS will require the income to be included on Sarah's return. 
D)  All of the above are false. 
A)  Valid family partnership partners may be subject to the "kiddie tax." 
B)  Bob gives his 16- year- old daughter Michelle a 20% capital and profits interest in his accounting practice. She does no work for the partnership and is not involved at all with the operations of the partnership. In fact, she does not know that her dad transferred the interest in the partnership to her. If the partnership allocates an $8,000 distributive share of ordinary income to her, it is properly reported on Michelle's individual tax return. 
C)  Joan gives her daughter, Sarah, a 25% interest in a partnership that operates a steel mill. Sarah, age 19, was allocated $20,000 from the partnership as her share of the partnership ordinary income. The IRS will require the income to be included on Sarah's return. 
D)  All of the above are false.

Question 5

Under what conditions will a special allocation of partnership depreciation be recognized? Assume the partnership has no nonrecourse liabilities.

Accepted Answer

A special allocation must be stated in t

Question 6

ABC Partnership distributes $12,000 to partner Al. Al's distributive share of partnership income is
$20,000. Al is taxed on $20,000.

Accepted Answer

A) True 
 B)False

Question 7

The definition of a partnership does not include

Accepted Answer

A)  a pool. 
B)  a group. 
C)  a syndicate. 
D)  All of the above are included. 
A)  a pool. 
B)  a group. 
C)  a syndicate. 
D)  All of the above are included.

Question 8

Electing large partnership rules differ from other partnership rules in all of the following areas except

Accepted Answer

A)  partnership audits. 
B)  partnership termination. 
C)  partnership income reporting. 
D)  All of the above are large partnership rule differences. 
A)  partnership audits. 
B)  partnership termination. 
C)  partnership income reporting. 
D)  All of the above are large partnership rule differences.

Question 9

Samantha works 40 hours a week as a clerk in the mall and earns $28,000. In addition, she works five hours each week in the XYZ Partnership's office. Samantha, a 15% limited partner in the XYZ Partnership, has been allocated a $4,000 loss from the partnership for the current year. The basis for her interest in XYZ before accounting for current operations is $7,000. What tax issues should Samantha consider with respect to her interest in, and employment by, the XYZ Partnership?

Accepted Answer

• What is Samantha's deductible loss fro

Question 10

Explain the difference between partnership distributions and distributive shares.

Accepted Answer

Partnership distributions represent the

Question 11

Explain the three different limitation provisions that a partner must satisfy before a loss can be deducted.

Accepted Answer

In the order of application, t

Question 12

Identify which of the following statements is true.

Accepted Answer

A)  A partnership cannot make charitable contributions. 
B)  Dividends received by a partnership from a domestic corporation are included in the partnership's ordinary income. 
C)  A partnership cannot have an NOL carryback or carryforward. 
D)  All of the above are false. 
A)  A partnership cannot make charitable contributions. 
B)  Dividends received by a partnership from a domestic corporation are included in the partnership's ordinary income. 
C)  A partnership cannot have an NOL carryback or carryforward. 
D)  All of the above are false.

Question 13

Dan purchases a 25% interest in the Haymarket Partnership for $20,000 on January 1, and begins to materially participate in the partnership's business. The Haymarket Partnership uses the calendar year as its tax year. At the time of the purchase, the Haymarket Partnership has $2,000 in liabilities, and Dan's share is 25%. During the year, the Haymarket Partnership incurs $8,000 in losses and its liabilities increase by $4,000. What is Dan's basis in his partnership interest on December 31?

Accepted Answer

The answer of Dan purchases a 25% interest in the...

Question 14

Does the contribution of services to a partnership in exchange for an unrestricted partnership interest qualify for Sec. 721 nontaxable treatment?

Accepted Answer

No. The service partner recogn

Identify which of the following statements is true.

Identify which of the following statements is true.

Under what conditions will a special allocation of partnership depreciation be recognized? Assume the partnership has no nonrecourse liabilities.

ABC Partnership distributes $12,000 to partner Al. Al's distributive share of partnership income is $20,000. Al is taxed on $20,000.

The definition of a partnership does not include

Electing large partnership rules differ from other partnership rules in all of the following areas except

Explain the difference between partnership distributions and distributive shares.

Explain the three different limitation provisions that a partner must satisfy before a loss can be deducted.

Identify which of the following statements is true.

Does the contribution of services to a partnership in exchange for an unrestricted partnership interest qualify for Sec. 721 nontaxable treatment?

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

U.S. Taxation of Foreign-Related Transactions

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Exam 9: Partnership Formation and Operation

Identify which of the following statements is true.

Identify which of the following statements is true.

Under what conditions will a special allocation of partnership depreciation be recognized? Assume the partnership has no nonrecourse liabilities.

ABC Partnership distributes $12,000 to partner Al. Al's distributive share of partnership income is $20,000. Al is taxed on $20,000.

The definition of a partnership does not include

Electing large partnership rules differ from other partnership rules in all of the following areas except

Explain the difference between partnership distributions and distributive shares.

Explain the three different limitation provisions that a partner must satisfy before a loss can be deducted.

Identify which of the following statements is true.

Does the contribution of services to a partnership in exchange for an unrestricted partnership interest qualify for Sec. 721 nontaxable treatment?

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

U.S. Taxation of Foreign-Related Transactions

Filters