Exam 10: Special Partnership Issues

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

Which of the following statements is correct?

Tony sells his one-fourth interest in the WindyCity Partnership to Bill for $100,000 cash when the partnership's assets are as follows: 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 is the allocation of Tony's gain to the assets received?

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

The total bases of all distributed property in the partner's hands following a nonliquidating distribution is limited to

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

David sells his one-third partnership interest to Diana for $60,000 when his basis in the partnership interest is $48,000. On the date of sale, the partnership has no liabilities and the following assets: The building is depreciated on a straight-line basis. What tax issues should David and Diana consider with respect to the sale transaction?

Identify which of the following statements is true.

Jerry has a $50,000 basis for his interest in JJ Partnership before receiving a current distribution consisting of $8,000 in money, accounts receivable having a zero basis to the partnership, and land having a $28,000 basis to the partnership. What will Jerry's basis be in these assets?

Carlos 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), land held as an investment (FMV $7,000, basis, $6,000), and building (FMV $21,000, basis $9,000). The partners' relative interests in the Sec. 751 assets do not change as a result of the current distribution. Carlos's basis in the building is

If a partner dies, his or her tax year closes

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.

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 the basis in Tenika's hands of the distributed property?

Eicho's interest in the DPQ Partnership is terminated when her basis in the partnership is $70,000. She receives a liquidating distribution of $20,000 cash and inventory with a $24,000 basis and a $40,000 FMV. What is her gain or loss, and what is her basis in the inventory received?

What is the definition of "substantially appreciated inventory"?

The LM Partnership terminates for tax purposes on July 15 when Latasha sells her 60% capital and profits interest to Zoe for $100,000. The partnership has no liabilities, and its assets at the time of termination are as follows: Marika, a 40% partner in the LM Partnership, has a $64,800 basis in her partnership interest (outside basis)at the time of the termination. She has held her LM Partnership interest for three years at the time of the termination. The basis of Marika and Zoe in the new LM Partnership is:

Identify which of the following statements is true.

The HMS Partnership, a cash method of accounting entity, has the following balance sheet at December 31 of last year: Sam, who has a one-third interest in profits, losses, and liabilities, sells his partnership interest to Beverly, for $77,000 cash on January 1 of this year. Sam's basis in his partnership interest (which, of course, includes a share of partnership liabilities)at the time of the sale was $17,000. In addition, Beverly assumes Sam's share of the partnership liabilities. What is the amount and character of the gain that Sam will recognize from this sale?

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

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