Question 1

For tax purposes, in computing the ordinary income of a partnership, a deduction is allowed for:

Accepted Answer

A) Payments to partners, determined without regard to the income of the partnership, for services provided to the partnership. 
B) The net operating loss deduction. 
C) Contributions to charitable organizations. 
D) Personal exemptions of the partners. 
E) None of the above. 
A) Payments to partners, determined without regard to the income of the partnership, for services provided to the partnership. 
B) The net operating loss deduction. 
C) Contributions to charitable organizations. 
D) Personal exemptions of the partners. 
E) None of the above.

Question 2

If Margo and Bruce purchase and operate an ice cream store, for tax purposes they have formed a partnership.

Accepted Answer

A) True 
 B)False

Question 3

Because a partnership does not pay taxes, a partnership is not recognized as a legal entity under civil law.

Accepted Answer

A) True 
 B)False

Question 4

Jerry receives cash of $15,000 and a building with a fair market value of $50,000 (adjusted basis of $30,000)in a current distribution.
a.​Assuming his basis in his partnership interest was $50,000, what amount of gain must Jerry recognize as a result of the current distribution?
b.​Assuming his basis in his partnership interest was $10,000, what amount of gain must Jerry recognize as a result of the current distribution?

Accepted Answer

a.$0.He still has a $5,000 bas

Question 5

Lucky's original contribution to the Boxwood Partnership was land with a basis of $5,000 and a market value of $55,000.Her share of the taxable income from the partnership since her original contribution has been $95,000 and Lucky has received $45,000 in cash distributions from the partnership.Lucky did not recognize any gains as a result of the distributions.Calculate Lucky's current basis in her partnership interest.

Accepted Answer

$55,000 =

Question 6

A partnership reports its income on Form 1040.

Accepted Answer

A) True 
 B)False

Question 7

Partnership losses that are not used because a partner's basis in the partnership interest is zero may not be carried forward and are lost by the partner.

Accepted Answer

A) True 
 B)False

Question 8

A partner's interest in a partnership is decreased by:

Accepted Answer

A) Capital gains of the partnership. 
B) Distributions from the partnership. 
C) Taxable income of the partnership. 
D) Additional contributions by the partner. 
E) None of the above. 
A) Capital gains of the partnership. 
B) Distributions from the partnership. 
C) Taxable income of the partnership. 
D) Additional contributions by the partner. 
E) None of the above.

Question 9

The partnership of Felix and Oscar had the following items of income during the current tax year: $$\begin{array} { l r } 
\text { Income from operations } & \$ 157,000 \
\text { Tax-exempt interest income } & 8,000 \
\text { Dividend income } & 6,000
\end{array}$$ What is the total ordinary income from business activities passed through by the partnership for the current tax year?

Accepted Answer

A) $156,000 
B) $157,000 
C) $165,000 
D) $110,000 
E) None of the above 
A) $156,000 
B) $157,000 
C) $165,000 
D) $110,000 
E) None of the above

Question 10

A partner's receipt of guaranteed payments is a form of qualified business income.

Accepted Answer

A) True 
 B)False

Question 11

The partnership of Truman and Hanover realized the following items of income during the current tax year: $\begin{array}{llcc}
  \text { Net income from operations } & \$65,000 \
 \text { Dividends from domestic corporations } &4,000\
 \text { Interest on corporate bonds } &3,000\
 \text { Net long-term capital gains } &5,000\
 \text {Net short-term capital gains  } &1,000\
\end{array}$
 Both the partners are on a calendar year basis.What is the total income which should be reported as ordinary income from business activities of the partnership for the current tax year?

Accepted Answer

A) $0 
B) $65,000 
C) $69,000 
D) $71,000 
E) None of the above 
A) $0 
B) $65,000 
C) $69,000 
D) $71,000 
E) None of the above

Question 12

Sabrina contributes a building with an adjusted basis of $80,000 to a partnership.The fair market value of the building is $100,000 on the date of the contribution.What is Sabrina's basis in her partnership interest immediately after the contribution?

Accepted Answer

A) $0 
B) $40,000 
C) $80,000 
D) $100,000 
E) None of the above 
A) $0 
B) $40,000 
C) $80,000 
D) $100,000 
E) None of the above

Question 13

Lilac Designs is a partnership with a tax year that ends November 30, 2018.During that year, William, a partner, received $4,000 per month as a guaranteed payment and his share of partnership income after guaranteed payments was $20,000.For December of 2018, William received a guaranteed payment of $10,000.Calculate the amount of income from the partnership that William should report for his tax year ended December 31, 2018.

Accepted Answer

$68,000 =

Question 14

Salix Associates is a partnership with an October 31 year-end.For the fiscal year ended October 31, 2018, Salix Associates reported ordinary income of $100,000, after deducting guaranteed payments.Max, a calendar year taxpayer, is a 30 percent partner in the partnership and received $2,000 monthly as a guaranteed payment for the calendar year 2017, and $2,100 monthly for the calendar year 2018.What is the total income from the partnership that Max should report on his 2018 individual income tax return?

Accepted Answer

A) $30,000 
B) $54,200 
C) $55,000 
D) $55,200 
E) None of the above 
A) $30,000 
B) $54,200 
C) $55,000 
D) $55,200 
E) None of the above

Question 15

Nash and Ford are partners who share profits and losses equally.For the current tax year, the partnership had book income of $70,000 which included the following deductions: $$\begin{array}{l}
\text { Guaranteed payments to partners: }\
\begin{array} { l r } 
\text { Nash } & \$ 35,000 \
\text { Ford } & 25,000 \
\text { Charitable contributions } & 5,000
\end{array}
\end{array}$$ What amount should be reported as ordinary income on the partnership return for the current tax year?

Accepted Answer

A) $75,000 
B) $85,000 
C) $130,000 
D) $135,000 
E) None of the above 
A) $75,000 
B) $85,000 
C) $130,000 
D) $135,000 
E) None of the above

Question 16

A distribution of cash to a partner was greater than his basis in the partnership.How would this distribution be treated by the partner, assuming the distribution is not a liquidating distribution?

Accepted Answer

The portion equal to the partner's basis

Question 17

The "at-risk" rule does not apply to activities involving real estate.

Accepted Answer

A) True 
 B)False

Question 18

Please answer the following questions:
a.What form is used to report income and expenses from a partnership?
b.​​If a partner's basis at the beginning of the year is $1,000 and the partnership allocates $7,000 of loss to the partner: how much of the loss is deductible in the current year; what is his new basis in the partnership; and what happens to any excess loss not deducted?
c.What is the exemption amount for a partnership?

Accepted Answer

a.Partnership income and expenses are re

Question 19

Which of the following items must be reported separately from ordinary income or loss on a partnership return?

Accepted Answer

A) Capital losses 
B) Miscellaneous income 
C) Cost of goods sold 
D) Sales income 
E) None of the above 
A) Capital losses 
B) Miscellaneous income 
C) Cost of goods sold 
D) Sales income 
E) None of the above

Question 20

An equal partnership is formed by Rita and Gerry.Rita contributes cash of $10,000 and a building with a fair market value of $150,000, adjusted basis of $55,000, and subject to a liability of $60,000.Gerry contributes cash of $100,000.What amount of gain must Rita recognize as a result of this transaction?

Accepted Answer

A) $95,000 
B) $35,000 
C) $5,000 
D) $0 
E) None of the above 
A) $95,000 
B) $35,000 
C) $5,000 
D) $0 
E) None of the above

For tax purposes, in computing the ordinary income of a partnership, a deduction is allowed for:

If Margo and Bruce purchase and operate an ice cream store, for tax purposes they have formed a partnership.

Because a partnership does not pay taxes, a partnership is not recognized as a legal entity under civil law.

A partnership reports its income on Form 1040.

Partnership losses that are not used because a partner's basis in the partnership interest is zero may not be carried forward and are lost by the partner.

A partner's interest in a partnership is decreased by:

A partner's receipt of guaranteed payments is a form of qualified business income.

Sabrina contributes a building with an adjusted basis of $80,000 to a partnership.The fair market value of the building is $100,000 on the date of the contribution.What is Sabrina's basis in her partnership interest immediately after the contribution?

A distribution of cash to a partner was greater than his basis in the partnership.How would this distribution be treated by the partner, assuming the distribution is not a liquidating distribution?

The "at-risk" rule does not apply to activities involving real estate.

Which of the following items must be reported separately from ordinary income or loss on a partnership return?

The Individual Income Tax Return

Gross Income and Exclusions

Additional Income Part 1

Additional Income Part 2

Deductions and Adjustments to Income

Accounting Methods and Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments, and Retirement Plans

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 10: Partnership Taxation

For tax purposes, in computing the ordinary income of a partnership, a deduction is allowed for:

If Margo and Bruce purchase and operate an ice cream store, for tax purposes they have formed a partnership.

Because a partnership does not pay taxes, a partnership is not recognized as a legal entity under civil law.

A partnership reports its income on Form 1040.

Partnership losses that are not used because a partner's basis in the partnership interest is zero may not be carried forward and are lost by the partner.

A partner's interest in a partnership is decreased by:

A partner's receipt of guaranteed payments is a form of qualified business income.

Sabrina contributes a building with an adjusted basis of $80,000 to a partnership.The fair market value of the building is $100,000 on the date of the contribution.What is Sabrina's basis in her partnership interest immediately after the contribution?

A distribution of cash to a partner was greater than his basis in the partnership.How would this distribution be treated by the partner, assuming the distribution is not a liquidating distribution?

The "at-risk" rule does not apply to activities involving real estate.

Which of the following items must be reported separately from ordinary income or loss on a partnership return?

The Individual Income Tax Return

Gross Income and Exclusions

Additional Income Part 1

Additional Income Part 2

Deductions and Adjustments to Income

Accounting Methods and Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments, and Retirement Plans

The Corporate Income Tax

Tax Administration and Tax Planning

Filters