Exam 9: Partnership Formation and Operation

Karl arranges financing for a limited partnership to purchase real estate in exchange for a 50% interest in partnership profits.Two weeks later,Karl sells the profits interest for $30,000.In this tax year,Karl must recognize

Brent is a general partner in BC Partnership.His distributive share of partnership income and his guaranteed payment for the year are as follows: What is his self-employment income?

A partnership must file Form 1065 only if its income exceeds $1,000.

On December 1,Antonio,a member of a three-person partnership,purchases investment securities from the partnership for their $37,000 FMV.All partners share profits and losses equally.The securities were acquired by the partnership for $25,000 cash in March of the current year.What amount and character of gain will Antonio recognize because of this transaction?

AT Pet Spa is a partnership owned equally by Travis and Ashley.The partnership had the following revenues and expenses this year.Which of the following items are separately stated? Nonseparately stated? What is each partner's distributive share of ordinary income?

George pays $10,000 for a 20% interest in a general partnership,which has recourse liabilities of $20,000.The partners share the economic risk of loss from recourse liabilities in the same way they share partnership losses.George's basis in his partnership interest is

For a 30% interest in partnership capital,profits,and losses,Carol contributes a machine with a basis of $40,000 and an FMV of $80,000.The partnership assumes a $70,000 recourse liability on the machine.At the time of the contribution,the partnership had recourse liabilities of $10,000.Partners share the economic risk of loss from recourse liabilities in the same way they share partnership losses.Following the contribution,Carol has

Allen contributed land,which was being held for sale to Allen's customers,to a partnership in exchange for a 20% interest.The partnership uses the land in its business for three years and then sells the property.When the property was contributed,it had a basis in Allen's hands of $500,000 and an FMV of $600,000.The partnership sells the land for $700,000.The gain reported by the partnership is

Identify which of the following statements is true.

Identify which of the following statements is false.

A partnership cannot make charitable contributions.

Jeremey is a partner in the Jimmy partnership.Why does he need to know his basis in his partnership interest?

Explain the three different limitation provisions that a partner must satisfy before a loss can be deducted.

The XYZ Partnership reports the following operating results for the current year: Tai has a 20% profits interest and a 25% loss interest in the XYZ Partnership.His distributive share of ordinary income is

The RT Limited Partnership incurs the following expenses during the time that the partnership is being organized: Attorneys' fees: What is the maximum amount that the partnership can deduct as an organization and syndication expense for the first year in which the partnership begins business,assuming the business began on October 1?

What is the tax impact of guaranteed payments on the partner and the partnership?

What are the three rules and their order when determining a partnership tax year?

Identify which of the following statements is true.

Charles Jordan files his income tax return on a calendar-year basis.He is a principal partner in a partnership using a tax year ending June 30.Jordan's share of the partnership's ordinary income was $24,000 for the fiscal year ending June 30 of last year and $72,000 for the fiscal year ending June 30 of the current year.Assume the partnership earned its income evenly throughout the year.How much should Jordan report on his Form 1040 for last year as his share of the partnership's ordinary income?

Jason,a lawyer,provided legal services for the employees of the ABC Partnership during the first six months of the current year.In exchange,he received a 2% capital and profits interest in the partnership.The value of the interest is $5,000.What are the tax consequences to Jason,the ABC Partnership,and the employees of ABC?