Question 1

Which of the following items decreases a partner's basis in his or her partnership interest?

Accepted Answer

A)  A cash distribution from the partnership. 
B)  A nondeductible expense that flows through from the partnership. 
C)  A release from partnership liabilities. 
D)  All of these. 
A)  A cash distribution from the partnership. 
B)  A nondeductible expense that flows through from the partnership. 
C)  A release from partnership liabilities. 
D)  All of these.

Question 2

Bryan,Shahin,and Michele form a partnership.Bryan and Shahin contribute inventory and a building,respectively.Michele agrees to perform all of the accounting and office work in exchange for a 10% interest.   a.Do any of the partners recognize any gain? If so,how much and why?
b.What is each partner's basis in his or her partnership interest?
c.What is the basis to the partnership of each asset?

Accepted Answer

a.Michele will recognize $60,0

Question 3

The term "step-into-the-shoes" means that the partnership starts a new depreciation period for any depreciable asset contributed to the partnership.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following partnership items are not included in the self-employment income calculation?

Accepted Answer

A)  Ordinary income. 
B)  Section 179 expense. 
C)  Guaranteed payments. 
D)  Gain on the sale of partnership property. 
A)  Ordinary income. 
B)  Section 179 expense. 
C)  Guaranteed payments. 
D)  Gain on the sale of partnership property.

Question 5

A partner never recognizes a gain or loss on the formation of a partnership.

Accepted Answer

A) True 
 B)False

Question 6

Rental income and expenses are treated as:

Accepted Answer

A)  Ordinary income for all partners. 
B)  Separately stated because individual partners may treat rental income or losses differently. 
C)  Capital gains or losses because the rental property is an investment. 
D)  None of these. 
A)  Ordinary income for all partners. 
B)  Separately stated because individual partners may treat rental income or losses differently. 
C)  Capital gains or losses because the rental property is an investment. 
D)  None of these.

Question 7

In 2013,Angel contributes land to a partnership with a basis of $12,000 and a FMV of $22,000.In 2014,when the FMV of the land is $28,000,the partnership distributes the land to Shelia,another partner.What is the basis of the land to Shelia assuming she has a $40,000 basis in her partnership interest?

Accepted Answer

A)  $0. 
B)  $12,000. 
C)  $22,000. 
D)  $28,000. 
A)  $0. 
B)  $12,000. 
C)  $22,000. 
D)  $28,000.

Question 8

Section 179 expense is reported as a(an):

Accepted Answer

A)  Ordinary deduction to a partnership. 
B)  Separately stated item. 
C)  Both as an ordinary deduction and as a separately stated item. 
D)  Capital loss to the partnership. 
A)  Ordinary deduction to a partnership. 
B)  Separately stated item. 
C)  Both as an ordinary deduction and as a separately stated item. 
D)  Capital loss to the partnership.

Question 9

Marty and Blake are equal partners in MB Partnership.The partnership reports the following items of income and expense:   a.Which items are considered separately stated items? How will these items be reported to the partners? What form will be used?
b.Where (on what forms)will these amounts be reported by the partners?

Accepted Answer

a.Separately stated

Question 10

Typically,a partner does not recognize a gain when he or she receives a current distribution.

Accepted Answer

A) True 
 B)False

Question 11

Caroline,Jessica,and Samantha form a partnership.Caroline contributes a building,Jessica contributes cash and Samantha will operate the business.   How much income must Samantha recognize?

Accepted Answer

A)  $0. 
B)  $400,000. 
C)  $480,000. 
D)  $500,000. 
A)  $0. 
B)  $400,000. 
C)  $480,000. 
D)  $500,000.

Question 12

A partner can recognize a loss on a liquidating distribution.

Accepted Answer

A) True 
 B)False

Question 13

Partner Spence had the following items reported on a partnership Schedule K-1:   Spence had a basis in his partnership interest of $23,000 at the beginning of the year.What is Spence's basis in his partnership interest at the end of the year?

Accepted Answer

A)  $21,000. 
B)  $31,200. 
C)  $54,200. 
D)  $70,200. 
A)  $21,000. 
B)  $31,200. 
C)  $54,200. 
D)  $70,200.

Question 14

A partner's share of recourse liabilities increases the partner's basis in his or her partnership interest.

Accepted Answer

A) True 
 B)False

Question 15

All income and expense items of a partnership that may be treated differently at the partner level must be "separately stated."

Accepted Answer

A) True 
 B)False

Question 16

A pre-contribution gain occurs when a partner contributes appreciated property to a partnership and,within seven years,the partnership distributes the same property to another partner.

Accepted Answer

A) True 
 B)False

Question 17

Partnership income and losses are divided into two components: ordinary items and separately stated items.

Accepted Answer

A) True 
 B)False

Question 18

Miguel contributes land to a partnership with a basis of $12,000 and a FMV of $18,000.How much gain will Miguel recognize?

Accepted Answer

A)  $0. 
B)  $6,000. 
C)  $12,000. 
D)  $18,000. 
A)  $0. 
B)  $6,000. 
C)  $12,000. 
D)  $18,000.

Question 19

If a personal-use asset is contributed to a partnership for business use,the partnership's basis in the asset is always the FMV of the asset.

Accepted Answer

A) True 
 B)False

Question 20

A partner had the following items reported on a partnership Schedule K-1:   The partner's self-employment income for the year equals:

Accepted Answer

A)  $28,000. 
B)  $37,000. 
C)  $42,000. 
D)  $68,000. 
A)  $28,000. 
B)  $37,000. 
C)  $42,000. 
D)  $68,000.

Which of the following items decreases a partner's basis in his or her partnership interest?

The term "step-into-the-shoes" means that the partnership starts a new depreciation period for any depreciable asset contributed to the partnership.

Which of the following partnership items are not included in the self-employment income calculation?

A partner never recognizes a gain or loss on the formation of a partnership.

Rental income and expenses are treated as:

Section 179 expense is reported as a(an):

Typically,a partner does not recognize a gain when he or she receives a current distribution.

Caroline,Jessica,and Samantha form a partnership.Caroline contributes a building,Jessica contributes cash and Samantha will operate the business. How much income must Samantha recognize?

A partner can recognize a loss on a liquidating distribution.

Partner Spence had the following items reported on a partnership Schedule K-1: Spence had a basis in his partnership interest of $23,000 at the beginning of the year.What is Spence's basis in his partnership interest at the end of the year?

A partner's share of recourse liabilities increases the partner's basis in his or her partnership interest.

All income and expense items of a partnership that may be treated differently at the partner level must be "separately stated."

A pre-contribution gain occurs when a partner contributes appreciated property to a partnership and,within seven years,the partnership distributes the same property to another partner.

Partnership income and losses are divided into two components: ordinary items and separately stated items.

Miguel contributes land to a partnership with a basis of $12,000 and a FMV of $18,000.How much gain will Miguel recognize?

If a personal-use asset is contributed to a partnership for business use,the partnership's basis in the asset is always the FMV of the asset.

A partner had the following items reported on a partnership Schedule K-1: The partner's self-employment income for the year equals:

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income

Capital Gains and Other Sales of Property

Rental Property, Royalties, and Income From Flow-Through Entities

Tax Credits

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Corporate Taxation

Filters

Exam 14: Partnership Taxation

Which of the following items decreases a partner's basis in his or her partnership interest?

The term "step-into-the-shoes" means that the partnership starts a new depreciation period for any depreciable asset contributed to the partnership.

Which of the following partnership items are not included in the self-employment income calculation?

A partner never recognizes a gain or loss on the formation of a partnership.

Rental income and expenses are treated as:

Section 179 expense is reported as a(an):

Typically,a partner does not recognize a gain when he or she receives a current distribution.

Caroline,Jessica,and Samantha form a partnership.Caroline contributes a building,Jessica contributes cash and Samantha will operate the business. How much income must Samantha recognize?

A partner can recognize a loss on a liquidating distribution.

Partner Spence had the following items reported on a partnership Schedule K-1: Spence had a basis in his partnership interest of $23,000 at the beginning of the year.What is Spence's basis in his partnership interest at the end of the year?

A partner's share of recourse liabilities increases the partner's basis in his or her partnership interest.

All income and expense items of a partnership that may be treated differently at the partner level must be "separately stated."

A pre-contribution gain occurs when a partner contributes appreciated property to a partnership and,within seven years,the partnership distributes the same property to another partner.

Partnership income and losses are divided into two components: ordinary items and separately stated items.

Miguel contributes land to a partnership with a basis of $12,000 and a FMV of $18,000.How much gain will Miguel recognize?

If a personal-use asset is contributed to a partnership for business use,the partnership's basis in the asset is always the FMV of the asset.

A partner had the following items reported on a partnership Schedule K-1: The partner's self-employment income for the year equals:

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income

Capital Gains and Other Sales of Property

Rental Property, Royalties, and Income From Flow-Through Entities

Tax Credits

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Corporate Taxation

Filters