Question 1

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

Accepted Answer

A partner must divide the sale of a part

Question 2

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

Accepted Answer

A) cash. 
B) land held for investment. 
C) marketable securities not held by dealers. 
D) depreciation recapture potential on Sec. 1231 assets. 
A) cash. 
B) land held for investment. 
C) marketable securities not held by dealers. 
D) depreciation recapture potential on Sec. 1231 assets.

Question 3

All states have adopted laws providing for limited liability companies. Describe a limited liability company (LLC).

Accepted Answer

An LLC often combines the legal benefits

Question 4

Joshua is a 40% partner in the XY Partnership when he sells his entire interest to Stanley for $60,000 cash. At the time of the sale, Joshua's basis is $36,000, which includes his $10,000 share of partnership liabilities. The partnership has no Sec. 751 assets. Calculate Joshua's gain or loss on the sale.

Accepted Answer

The answer of Joshua is a 40% partner in the...

Question 5

On December 31, Kate receives a $28,000 liquidating distribution from the KLM Partnership. On that date, Kate's basis in her limited partnership interest is $18,000 (which, of course, includes her share of partnership liabilities). The other partners assume her $6,000 share of liabilities. Just prior to the distribution, the partnership has the following balance sheet. Kate is leaving the partnership but the partnership is continuing.     What is the amount and character of the gain that Kate must recognize on the liquidating distribution?

Accepted Answer

Divide the payments between Sec. 736(a)a

Question 6

Han purchases a 25% interest in the CHOP Partnership from Huang for $600,000. The partnership has assets with a basis of $1,600,000. What is the amount of the basis adjustment, if the partnership has a 754 election in place?

Accepted Answer

A) $0 
B) $150,000 increase in Han's basis in his partnership interest 
C) $200,000 increase in Han's share of the basis in partnership assets 
D) $1,000,000 increase in partnership assets 
A) $0 
B) $150,000 increase in Han's basis in his partnership interest 
C) $200,000 increase in Han's share of the basis in partnership assets 
D) $1,000,000 increase in partnership assets

Question 7

Tenika has a $10,000 basis in her interest in the TF Partnership and no remaining precontribution gain immediately before receiving a current distribution that consisted of $4,000 in money, plastic tubes held in inventory with a $3,000 basis to the partnership and an FMV of $3,375, and drip irrigation pipe held as inventory with a $6,000 basis to the partnership and an FMV of $5,000. What is Tenika's basis for the plastic tubes and drip irrigation pipe?

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 8

Danielle has a basis in her partnership interest of $12,000. She receives a current distribution of $8,000 cash and equipment with a basis of $7,000. There is no potential gain under Sec. 737. What is her basis in the equipment?

Accepted Answer

A) $0 
B) $4,000 
C) $7,000 
D) none of the above 
A) $0 
B) $4,000 
C) $7,000 
D) none of the above

Question 9

In a current distribution, the partner's basis in the partnership interest is reduced by the amount of money received and by the partnership's bases in the distributed property.

Accepted Answer

A) True 
 B)False

Question 10

Identify which of the following statements is true.

Accepted Answer

A) A liquidating distribution that terminates a partnership interest cannot include more than one distribution. 
B) A partnership with a large amount of unrealized receivables and substantially appreciated inventory items liquidated and distributed all of its assets in kind to each partner in proportion to their partnership interests. Each partner will report ordinary income at the time these assets are received equal to their FMV. 
C) The rule for recognizing gain on a liquidating distribution is the same rule that is used for a current distribution. 
D) All of the above are false. 
A) A liquidating distribution that terminates a partnership interest cannot include more than one distribution. 
B) A partnership with a large amount of unrealized receivables and substantially appreciated inventory items liquidated and distributed all of its assets in kind to each partner in proportion to their partnership interests. Each partner will report ordinary income at the time these assets are received equal to their FMV. 
C) The rule for recognizing gain on a liquidating distribution is the same rule that is used for a current distribution. 
D) All of the above are false.

Question 11

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

Accepted Answer

A) An incoming partner pays more for a partnership interest that his or her proportionate share of partnership assets. 
B) Partners are able to increase their basis in the partnership interest upon the sale of a partnership interest. 
C) Partnerships can increase, but not decrease, their basis in partnership assets. 
D) A partnership can reduce its basis in assets upon cash distributions to partners. 
A) An incoming partner pays more for a partnership interest that his or her proportionate share of partnership assets. 
B) Partners are able to increase their basis in the partnership interest upon the sale of a partnership interest. 
C) Partnerships can increase, but not decrease, their basis in partnership assets. 
D) A partnership can reduce its basis in assets upon cash distributions to partners.

Question 12

A partner's holding period for a partnership interest is never considered when determining the holding period for property distributed in a liquidating distribution.

Accepted Answer

A) True 
 B)False

Question 13

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?

Accepted Answer

A) $0 
B) $4,000 long-term capital loss 
C) $4,000 short-term capital loss and $2,000 ordinary loss 
D) $4,000 long-term capital loss and $2,000 ordinary loss 
A) $0 
B) $4,000 long-term capital loss 
C) $4,000 short-term capital loss and $2,000 ordinary loss 
D) $4,000 long-term capital loss and $2,000 ordinary loss

Question 14

Becky has a $24,000 basis in her partnership interest. She receives a current distribution of $4,000 cash, unrealized receivables with a basis of $12,000 and an FMV of $16,000, and land held as an investment with a basis of $3,000 and an FMV of $8,000. The partners' relative interests in the Sec. 751 assets do not change as a result of the current distribution. The basis of her partnership interest following the distribution is

Accepted Answer

A) $5,000. 
B) $1,000. 
C) $0. 
D) ($4,000). 
A) $5,000. 
B) $1,000. 
C) $0. 
D) ($4,000).

Question 15

Last year, Cara contributed investment land with an FMV of $24,000 and basis of $18,000 to the CDE Partnership. CDE made no distributions during last year, and Cara's basis in her partnership interest on December 31 of last year was $28,000. On January 1 of this year, the partnership distributed cash of $30,000 to Cara and distributed the land contributed by Cara to another partner, David. On the distribution date, the land had a $27,000 FMV. Assume the CDE Partnership reported no profit or loss this year. How much gain (if any)must Cara recognize as a result of the distributions? What is her basis in the partnership after the distributions?

Accepted Answer

Cara must recognize a $6,000 capital gai

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Do most distributions made by a partnership require a Sec. 751 calculation?

Accepted Answer

No. Many current distributions are made

Question 18

What is included in the definition of unrealized receivables?

Accepted Answer

Unrealized receivables include not only

Question 19

The definition of "unrealized receivable" does not include the

Accepted Answer

A) right to payment for services performed by a cash-basis taxpayer. 
B) recapture potential on Sec. 1245 property. 
C) recapture potential on Sec. 1250 property. 
D) right to payment for services performed by an accrual-basis taxpayer. 
A) right to payment for services performed by a cash-basis taxpayer. 
B) recapture potential on Sec. 1245 property. 
C) recapture potential on Sec. 1250 property. 
D) right to payment for services performed by an accrual-basis taxpayer.

Question 20

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?

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

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

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

All states have adopted laws providing for limited liability companies. Describe a limited liability company (LLC).

Han purchases a 25% interest in the CHOP Partnership from Huang for $600,000. The partnership has assets with a basis of $1,600,000. What is the amount of the basis adjustment, if the partnership has a 754 election in place?

Danielle has a basis in her partnership interest of $12,000. She receives a current distribution of $8,000 cash and equipment with a basis of $7,000. There is no potential gain under Sec. 737. What is her basis in the equipment?

In a current distribution, the partner's basis in the partnership interest is reduced by the amount of money received and by the partnership's bases in the distributed property.

Identify which of the following statements is true.

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

A partner's holding period for a partnership interest is never considered when determining the holding period for property distributed in a liquidating distribution.

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

Do most distributions made by a partnership require a Sec. 751 calculation?

What is included in the definition of unrealized receivables?

The definition of "unrealized receivable" does not include the

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?

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

Partnership Formation and Operation

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Us Taxation of Foreign-Related Transactions

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Exam 10: Special Partnership Issues

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

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

All states have adopted laws providing for limited liability companies. Describe a limited liability company (LLC).

Han purchases a 25% interest in the CHOP Partnership from Huang for $600,000. The partnership has assets with a basis of $1,600,000. What is the amount of the basis adjustment, if the partnership has a 754 election in place?

Danielle has a basis in her partnership interest of $12,000. She receives a current distribution of $8,000 cash and equipment with a basis of $7,000. There is no potential gain under Sec. 737. What is her basis in the equipment?

In a current distribution, the partner's basis in the partnership interest is reduced by the amount of money received and by the partnership's bases in the distributed property.

Identify which of the following statements is true.

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

A partner's holding period for a partnership interest is never considered when determining the holding period for property distributed in a liquidating distribution.

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

Do most distributions made by a partnership require a Sec. 751 calculation?

What is included in the definition of unrealized receivables?

The definition of "unrealized receivable" does not include the

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?

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

Partnership Formation and Operation

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Us Taxation of Foreign-Related Transactions

Filters