Exam 10: Special Partnership Issues

Helmut contributed land with a basis of $5,000 and an FMV of $10,000 to the HG Partnership five years ago to acquire a 50% partnership interest.This year the land is distributed to another partner,Gail,when its FMV is $11,000.No other distributions have been made since Helmut became a partner.When the land is distributed to Gail,Helmut recognizes a gain of

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.She also receives,as part of the distribution,a desk that has a $100 basis and a $200 FMV to the partnership.What is her gain or loss,and what is her basis in the items received?

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?

The AB Partnership has a machine with an FMV of $25,000 and a basis of $20,000.The partnership has taken an $8,000 depreciation on the machine.The unrealized receivable related to the machine is

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?

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

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?

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

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?

Sean,Penelope,and Juan formed the SPJ partnership by each contributing assets with a basis and fair market value of $200,000.In the following year,Penelope sold her one-third interest to Pedro for $225,000.At the time of the sale,the SPJ partnership had the following balance sheet: Shortly after Pedro became a partner,SPJ sold the land for $475,000.What are the tax consequences of the sale to Pedro and the partnership (1)assuming there is no Section 754 election in place,and (2)assuming the partnership has a valid Section 754 election?

What is an electing large partnership? What are the advantages to the partnership of electing to be taxed under the electing large partnership rules?

A new partner,Gary,contributes cash and assumes a share of partnership liabilities.Diane's capital,profits,and loss interest in the partnership is reduced by 5% due to the admission of Gary.The Sec.751 rules do not apply.Partnership liabilities at the time Gary is admitted are $200,000,and all of the liabilities are recourse debts for which the partners share the economic risk of loss in the same way they share partnership profits.Diane's basis in the partnership interest prior to Gary's admission is $5,000.Due to the admission of Gary,partner Diane has

What is included in the definition of unrealized receivables?

If a partnership asset with a deferred precontribution gain is distributed within seven years of acquisition in a nonliquidating distribution to a partner who did not contribute the asset,the precontribution gain must be recognized by the contributing partner.

When Rachel's basis in her interest in the RST Partnership is $40,000,she receives a current distribution of office equipment.The equipment has an FMV of $60,000 and a basis of $50,000.Rachel will not use the office equipment in a business activity.What tax issues should Rachel consider with respect to the distribution?

Adnan had an adjusted basis of $11,000 for his interest in the Adnan and Donnell Partnership on December 31.On this date,Adnan received from the partnership,in complete liquidation of his interest,$10,000 cash and land with a $2,000 basis to the partnership and a $3,000 FMV.What is Adnan's basis for the land distributed to him?

For purposes of Sec.751,inventory includes all of the following except

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

Steve sells his 20% partnership interest having a $28,000 basis to Nancy for $40,000 cash.At the time of the sale,the partnership has no liabilities and its assets are as follows: The receivables and inventory are Sec.751 assets.There is no agreement concerning the allocation of the sales price.Steve must recognize

Identify which of the following statements is true.