Question 1

Identify which of the following statements is true.

Accepted Answer

A)  On December 31 of the current year, Max Curcio's adjusted basis for his interest in the Maduro & Motta Partnership is $36,000. Maduro & Motta distributes cash of $6,000 and a parcel of land held as an investment to Curcio in liquidation of his entire interest in the partnership. The land has an adjusted basis of $18,000 to the partnership and an FMV of $42,000. Curcio's basis in the land is $18,000. 
B)  Jake has a basis in his partnership interest of $40,000 before receiving a liquidating distribution of $5,000 cash, inventory with a basis of $4,000 and an FMV of $5,000, and land with a basis of $3,000 and an FMV of $6,000. Jake will receive no further distributions. He can recognize a loss of $28,000 at the time the liquidating distribution is received. 
C)  A partner's holding period for a partnership interest is never considered when determining the holding period for property distributed in a liquidating distribution. 
D)  All of the above are false. 
A)  On December 31 of the current year, Max Curcio's adjusted basis for his interest in the Maduro & Motta Partnership is $36,000. Maduro & Motta distributes cash of $6,000 and a parcel of land held as an investment to Curcio in liquidation of his entire interest in the partnership. The land has an adjusted basis of $18,000 to the partnership and an FMV of $42,000. Curcio's basis in the land is $18,000. 
B)  Jake has a basis in his partnership interest of $40,000 before receiving a liquidating distribution of $5,000 cash, inventory with a basis of $4,000 and an FMV of $5,000, and land with a basis of $3,000 and an FMV of $6,000. Jake will receive no further distributions. He can recognize a loss of $28,000 at the time the liquidating distribution is received. 
C)  A partner's holding period for a partnership interest is never considered when determining the holding period for property distributed in a liquidating distribution. 
D)  All of the above are false.

Question 2

Identify which of the following statements is true.

Accepted Answer

A)  A liquidating distribution that terminates a partnership interest cannot include more than one distribution. 
B)  A partnership with a large amount of unrealized receivables and substantially appreciated inventory items liquidated and distributed all of its assets in kind to each partner in proportion to their partnership interests. Each partner will report ordinary income at the time these assets are received equal to their FMV. 
C)  The rule for recognizing gain on a liquidating distribution is the same rule that is used for a current distribution. 
D)  All of the above are false. 
A)  A liquidating distribution that terminates a partnership interest cannot include more than one distribution. 
B)  A partnership with a large amount of unrealized receivables and substantially appreciated inventory items liquidated and distributed all of its assets in kind to each partner in proportion to their partnership interests. Each partner will report ordinary income at the time these assets are received equal to their FMV. 
C)  The rule for recognizing gain on a liquidating distribution is the same rule that is used for a current distribution. 
D)  All of the above are false.

Question 3

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

Accepted Answer

A)  capital assets or 1231 property. 
B)  items held for sale in the ordinary course of business. 
C)  accounts receivable. 
D)  All of the above are inventory per Sec. 751. 
A)  capital assets or 1231 property. 
B)  items held for sale in the ordinary course of business. 
C)  accounts receivable. 
D)  All of the above are inventory per Sec. 751.

Question 4

What is the character of the gain/loss on the sale of a partnership interest?

Accepted Answer

Because a partnership interest is genera

Question 5

Do most distributions made by a partnership require a Sec.751 calculation?

Accepted Answer

No.Many current distributions are made p

Question 6

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.

Accepted Answer

A) True 
 B)False

Question 7

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?

Accepted Answer

Cara must recognize a $6,000 capital gai

Question 8

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?

Accepted Answer

The answer of Tony sells his one-fourth interest in the...

Question 9

A partner's holding period for property distributed as a current distribution begins on the date of distribution.

Accepted Answer

A) True 
 B)False

Question 10

Jerry has a $50,000 basis for his interest in JJ Partnership before receiving a current distribution consisting of $8,000 in money,accounts receivable having a zero basis to the partnership,and land having a $28,000 basis to the partnership.What is Jerry's basis in his partnership interest after the distribution?

Accepted Answer

The answer of Jerry has a $50,000 basis for his...

Question 11

Mirabelle contributed land with a $5,000 basis and a $9,000 FMV to MS Partnership four years ago.This year the land is distributed to Sergio,another partner in the partnership.At the time of distribution,the land had a $12,000 FMV.How much gain should Mirabelle and Sergio recognize?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 12

Marc is a calendar-year taxpayer who owns a 30% capital and profits interest in the MN Partnership.Nancy sells the remaining 70% capital and profits interest to Henry on October 31.The partnership year-end is March 31 as permitted by the IRS for business purpose reasons.The MN Partnership

Accepted Answer

A)  terminates on March 31. 
B)  terminates on October 31. 
C)  terminates on December 31. 
D)  does not terminate. 
A)  terminates on March 31. 
B)  terminates on October 31. 
C)  terminates on December 31. 
D)  does not terminate.

Question 13

A partnership terminates for tax purposes

Accepted Answer

A)  only when it terminates under local partnership law. 
B)  when at least 50% of the total interest in partnership capital and profits changes hands by sale or exchange within twelve consecutive months. 
C)  when the sale of partnership assets is made only to an outsider(s) and not to an existing partner(s). 
D)  when a partnership tax return (Form 1065) ceases to be filed by the partnership. 
A)  only when it terminates under local partnership law. 
B)  when at least 50% of the total interest in partnership capital and profits changes hands by sale or exchange within twelve consecutive months. 
C)  when the sale of partnership assets is made only to an outsider(s) and not to an existing partner(s). 
D)  when a partnership tax return (Form 1065) ceases to be filed by the partnership.

Question 14

If a distribution occurs within ________ years of the contribution date,in a nonliquidating distribution that does not qualify for Sec.751 treatment,the distribution event may trigger a precontribution gain or loss.

Accepted Answer

A)  three 
B)  five 
C)  seven 
D)  unlimited 
A)  three 
B)  five 
C)  seven 
D)  unlimited

Question 15

What is the definition of "substantially appreciated inventory"?

Accepted Answer

A)  inventory with a FMV greater than its basis 
B)  inventory and unrealized receivables with a FMV greater than their basis 
C)  inventory with a FMV greater than 120% of its basis 
D)  inventory and unrealized receivables with a FMV greater than 120% of their basis 
A)  inventory with a FMV greater than its basis 
B)  inventory and unrealized receivables with a FMV greater than their basis 
C)  inventory with a FMV greater than 120% of its basis 
D)  inventory and unrealized receivables with a FMV greater than 120% of their basis

Question 16

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?

Accepted Answer

Ed must determine:
• How much is his dis

Question 17

The STU Partnership,an electing Large Partnership,has no passive activities and reports the following transactions for the year: net long-term capital losses $50,000,Sec.1231 gain $60,000,ordinary income $20,000,charitable contributions $15,000,and tax-exempt income $2,000.How much will be reported as long-term capital gains to its partners?

Accepted Answer

A)  $0 
B)  $10,000 
C)  $50,000 
D)  $60,000 
A)  $0 
B)  $10,000 
C)  $50,000 
D)  $60,000

Question 18

The HMS Partnership,a cash method of accounting entity,has the following balance sheet at December 31 of last year:
     Sam,who has a one-third interest in profits,losses,and liabilities,sells his partnership interest to Beverly,for $77,000 cash on January 1 of this year.Sam's basis in his partnership interest (which,of course,includes a share of partnership liabilities)at the time of the sale was $17,000.In addition,Beverly assumes Sam's share of the partnership liabilities.What is the amount and character of the gain that Sam will recognize from this sale?

Accepted Answer

Amount realized = $77,000 +$10,000 liabi

Question 19

On December 31,Kate receives a $28,000 liquidating distribution from the KLM Partnership.On that date,Kate's basis in her limited partnership interest is $18,000 (which,of course,includes her share of partnership liabilities).The other partners assume her $6,000 share of liabilities.Just prior to the distribution,the partnership has the following balance sheet.Kate is leaving the partnership but the partnership is continuing.
     What is the amount and character of the gain that Kate must recognize on the liquidating distribution?

Accepted Answer

Divide the payments between Sec.736(a)an

Question 20

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?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Identify which of the following statements is true.

Identify which of the following statements is true.

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

What is the character of the gain/loss on the sale of a partnership interest?

Do most distributions made by a partnership require a Sec.751 calculation?

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.

A partner's holding period for property distributed as a current distribution begins on the date of distribution.

Mirabelle contributed land with a $5,000 basis and a $9,000 FMV to MS Partnership four years ago.This year the land is distributed to Sergio,another partner in the partnership.At the time of distribution,the land had a $12,000 FMV.How much gain should Mirabelle and Sergio recognize?

Marc is a calendar-year taxpayer who owns a 30% capital and profits interest in the MN Partnership.Nancy sells the remaining 70% capital and profits interest to Henry on October 31.The partnership year-end is March 31 as permitted by the IRS for business purpose reasons.The MN Partnership

A partnership terminates for tax purposes

If a distribution occurs within ________ years of the contribution date,in a nonliquidating distribution that does not qualify for Sec.751 treatment,the distribution event may trigger a precontribution gain or loss.

What is the definition of "substantially appreciated inventory"?

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

US Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

US Taxation of Foreign-Related Transactions

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Exam 10: Special Partnership Issues

Identify which of the following statements is true.

Identify which of the following statements is true.

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

What is the character of the gain/loss on the sale of a partnership interest?

Do most distributions made by a partnership require a Sec.751 calculation?

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.

A partner's holding period for property distributed as a current distribution begins on the date of distribution.

Mirabelle contributed land with a $5,000 basis and a $9,000 FMV to MS Partnership four years ago.This year the land is distributed to Sergio,another partner in the partnership.At the time of distribution,the land had a $12,000 FMV.How much gain should Mirabelle and Sergio recognize?

Marc is a calendar-year taxpayer who owns a 30% capital and profits interest in the MN Partnership.Nancy sells the remaining 70% capital and profits interest to Henry on October 31.The partnership year-end is March 31 as permitted by the IRS for business purpose reasons.The MN Partnership

A partnership terminates for tax purposes

If a distribution occurs within ________ years of the contribution date,in a nonliquidating distribution that does not qualify for Sec.751 treatment,the distribution event may trigger a precontribution gain or loss.

What is the definition of "substantially appreciated inventory"?

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

US Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

US Taxation of Foreign-Related Transactions

Filters