Exam 10: Special Partnership Issues

The XYZ Partnership owns the following assets on December 31: A partner has a 20% interest with a basis of $6,000 in XYZ before receiving a liquidating distribution of $10,000 cash.XYZ Partnership has no liabilities.His recognized gain is

When must a partnership make mandatory basis adjustments?

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

Before receiving a liquidating distribution,Kathy's basis in her interest in the KLM Partnership is $30,000.The distribution consists of $5,000 in money,inventory having a $1,000 basis to the partnership and a $2,000 FMV,and two parcels of undeveloped land (not held as inventory)having basis of $3,000 and $9,000 to the partnership with FMVs of $5,000 and $12,000,respectively.What is Kathy's basis in each parcel of land?

On December 31,Kate sells her 20% interest (with a basis of $18,000 which,of course,includes a share of partnership liabilities)in the KLM Partnership to Karl for $27,000 cash plus assumption of her $6,000 share of liabilities.On that date,the partnership has the following balance sheet: What are the amount and character of the gain that Kate must recognize on the sale?

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 amount of gain realized by Tony on the sale of his partnership interest?

What conditions are required for a partner to recognize a loss upon receipt of a distribution from a partnership?

Patrick purchased a one-third interest in the PPP partnership for $600,000.At the time of the purchase,the partnership had a 754 election in effect and its only asset was land with a basis of $1,500,000.This year,PPP sells the land for $1,800,000.What is Patrick's recognized share of the gain on the sale of the land?

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 are the amount and character of Tony's gain?

The AB,BC,and CD Partnerships merge into the ABCD Partnership.AB (owned by Austin and Ben)contributes assets worth $100,000.BC (owned by Ben and Charlie)contributes assets worth $200,000.CD (owned by Charlie and Dennis)contributes assets worth $300,000.The capital and profits interest in ABCD is owned by: Austin,10%; Ben,30%; Charlie,25%; and Dennis,35%.ABCD Partnership is a continuation of

Identify which of the following statements is false.

Identify which of the following statements is true.

Two years ago,Tom contributed investment land with a basis of $50,000 and an FMV of $62,000 to the RST Partnership.This year,Tom has a basis in his partnership interest of $53,000 when he receives a current distribution of $14,000 cash and inventory with a basis of $35,000 and an FMV of $52,000.(There is no Sec.751 exchange in connection with the inventory distribution. )The partnership continues to hold the land Tom contributed.How much gain (if any)must Tom recognize as a result of this distribution?

Which of the following is a valid reason for making a 754 election?

Identify which of the following statements is true.

Identify which of the following statements is true.

Brown Company recently has been formed as a limited liability company (LLC).Brown Company is owned equally by three individuals-Gene,Susan,and Sandra-all of whom have substantial income from other sources.Brown is a manufacturing firm and expects to earn approximately $130,000 of ordinary income and $30,000 of long-term capital gain each year for the next several years.Gene will be a full-time manager and will receive a salary of $60,000 each year.What tax issues should the owners consider regarding the LLC's initial year of operations?

Susan contributed land with a basis of $6,000 and an FMV of $10,000 to the SH Partnership two years ago to acquire her partnership interest.This year,the land is distributed to Harry when its FMV is $11,000.No other distributions have been made since Susan became a partner.When the land is distributed,the partnership's basis in the land immediately before distribution is increased by

The TK Partnership has two assets: $20,000 cash and a machine having a $28,000 basis and a $40,000 FMV.The partnership has claimed $16,000 in depreciation on the machine since its purchase.If the machine is sold for its FMV,would TK Partnership have an unrealized receivable item?

Ed receives a $20,000 cash distribution from the EV Partnership,which reduces his partnership interest from one-third to one-fourth.The EV Partnership is a general partnership that uses the cash method of accounting and has substantial liabilities.EV's inventory has appreciated substantially since it was purchased.What issues should Ed consider with regard to the distribution?