Exam 9: Forming and Operating Partnerships

What is the difference between the aggregate and entity theory of partnership taxation? Provide two examples of how partnership tax rules reflect the aggregate theory and two examples of how they reflect the entity theory.

How does a partnership make a tax election for the current year?

Adjustments to a partner's outside basis are made annually to prevent double taxation on the sale of a partnership interest or at the time of a partnership distribution.

Hilary had an outside basis in LTL,General Partnership of $10,000 at the beginning of the year.LTL reported the following items on Hilary's K-1 for the year: ordinary business income of $5,000,a $10,000 reduction in Hilary's share of partnership debt,a cash distribution of $20,000,and tax-exempt income of $3,000.What is Hilary's adjusted basis at the end of the year?

Which of the following items are subject to the Net Investment Income tax when a partner is not a material participant in the partnership?

KBL,Inc.,AGW,Inc.,Blaster,Inc.,Shiny Shoes,Inc.,and a group of 24 individuals form Shoes Galore General Partnership on October 11,20X9.Now,Shoes Galore must adopt its required tax year-end.The partners' year-ends,profits interests,and capital interests are reflected in the table below.Given this information,what tax year-end must Shoes Galore use and what rule requires this year-end?