Question 1

The definition of "inventory" for purposes of Sec.751 includes

Accepted Answer

A)  cash. 
B)  land held for investment. 
C)  marketable securities not held by dealers. 
D)  depreciation recapture potential on Sec. 1231 assets. 
A)  cash. 
B)  land held for investment. 
C)  marketable securities not held by dealers. 
D)  depreciation recapture potential on Sec. 1231 assets.

Question 2

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?

Accepted Answer

Precontribution gain = $62,000

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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?

Accepted Answer

Yes.All of the $12,000 gain would be an

Question 5

Danielle has a basis in her partnership interest of $12,000.She receives a current distribution of $8,000 cash and equipment with a basis of $7,000.There is no potential gain under Sec.737.What is her basis in the equipment?

Accepted Answer

A)  $0 
B)  $4,000 
C)  $7,000 
D)  none of the above 
A)  $0 
B)  $4,000 
C)  $7,000 
D)  none of the above

Question 6

Under the check-the-box rules,an LLC with more than one member is taxed as a partnership unless it elects to be taxed as a corporation.

Accepted Answer

A) True 
 B)False

Question 7

All states have adopted laws providing for limited liability companies.Describe a limited liability company (LLC).

Accepted Answer

An LLC often combines the legal benefits

Question 8

When a retiring partner receives payments that exceed the value of that partner's partnership property,the excess payment is a guaranteed payment.

Accepted Answer

A) True 
 B)False

Question 9

A partner can recognize gain,but not loss,on a liquidating distribution.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A partner can recognize a loss on a dist

Question 11

Can a partner recognize both a gain and a loss on the sale of a partnership interest? If so,under what conditions?

Accepted Answer

A partner must divide the sale of a part

Question 12

On November 30,Teri received a current distribution of cash of $4,000,marketable securities with a basis of $24,000 and an FMV of $30,000,and inventory with a basis of $2,000 and an FMV of $6,000.Prior to the distribution,Teri's basis in her interest in the partnership was $30,000.(There is no Sec.751 exchange as a result of the distribution.)How much gain (if any)must Teri recognize as a result of the distribution?

Accepted Answer

The answer of On November 30,Teri received a current distribution...

Question 13

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.What is the impact of the distribution on Mirabelle's partnership basis?

Accepted Answer

A)  0 
B)  $4,000 increase 
C)  $4,000 decrease 
D)  $7,000 increase 
A)  0 
B)  $4,000 increase 
C)  $4,000 decrease 
D)  $7,000 increase

Question 14

The XYZ Partnership owns the following assets on December 31:   By how much must XYZ reduce its unrealized receivables to avoid meeting the substantially appreciated inventory test?

Accepted Answer

A)  $10,000 
B)  $14,000 
C)  $15,000 
D)  No amount of reduction of unrealized receivables will affect meeting the substantially appreciated inventory test. 
A)  $10,000 
B)  $14,000 
C)  $15,000 
D)  No amount of reduction of unrealized receivables will affect meeting the substantially appreciated inventory test.

Question 15

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 allocation of Tony's gain to the assets received?

Accepted Answer

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

Question 16

Identify which of the following statements is true.

Accepted Answer

A)  The depreciation recapture potential for a Sec. 1245 property is not included in the definition of a Sec. 751 asset. 
B)  For Sec. 751 purposes, "substantially appreciated inventory" means property held for sale to customers whose market value exceeds its adjusted basis. 
C)  Inventory for Sec. 751 purposes includes all property except cash, capital assets, and Sec. 1231 assets. 
D)  All of the above are false. 
A)  The depreciation recapture potential for a Sec. 1245 property is not included in the definition of a Sec. 751 asset. 
B)  For Sec. 751 purposes, "substantially appreciated inventory" means property held for sale to customers whose market value exceeds its adjusted basis. 
C)  Inventory for Sec. 751 purposes includes all property except cash, capital assets, and Sec. 1231 assets. 
D)  All of the above are false.

Question 17

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

Accepted Answer

A)  no recognized gain or loss and a partnership interest basis of $10,000. 
B)  no recognized gain or loss. 
C)  a recognized gain of $5,000 and a partnership interest basis of zero. 
D)  a recognized gain of $5,000 and a partnership interest basis of $5,000. 
A)  no recognized gain or loss and a partnership interest basis of $10,000. 
B)  no recognized gain or loss. 
C)  a recognized gain of $5,000 and a partnership interest basis of zero. 
D)  a recognized gain of $5,000 and a partnership interest basis of $5,000.

Question 18

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

Accepted Answer

A)  no gain or loss. 
B)  $2,000 capital loss. 
C)  $2,000 ordinary loss. 
D)  $10,000 capital loss and $20,000 ordinary loss. 
A)  no gain or loss. 
B)  $2,000 capital loss. 
C)  $2,000 ordinary loss. 
D)  $10,000 capital loss and $20,000 ordinary loss.

Question 19

Under Sec.751,unrealized receivables include potential Section 1245 or 1250 recapture on the partnership's depreciable property.

Accepted Answer

A) True 
 B)False

Question 20

A partnership cannot recognize a gain or loss on a current distribution.

Accepted Answer

A) True 
 B)False

The definition of "inventory" for purposes of Sec.751 includes

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

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?

Danielle has a basis in her partnership interest of $12,000.She receives a current distribution of $8,000 cash and equipment with a basis of $7,000.There is no potential gain under Sec.737.What is her basis in the equipment?

Under the check-the-box rules,an LLC with more than one member is taxed as a partnership unless it elects to be taxed as a corporation.

All states have adopted laws providing for limited liability companies.Describe a limited liability company (LLC).

When a retiring partner receives payments that exceed the value of that partner's partnership property,the excess payment is a guaranteed payment.

A partner can recognize gain,but not loss,on a liquidating distribution.

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

Can a partner recognize both a gain and a loss on the sale of a partnership interest? If so,under what conditions?

The XYZ Partnership owns the following assets on December 31: By how much must XYZ reduce its unrealized receivables to avoid meeting the substantially appreciated inventory test?

Identify which of the following statements is true.

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

Under Sec.751,unrealized receivables include potential Section 1245 or 1250 recapture on the partnership's depreciable property.

A partnership cannot recognize a gain or loss on a current distribution.

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

Exam 10: Special Partnership Issues

The definition of "inventory" for purposes of Sec.751 includes

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

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?

Danielle has a basis in her partnership interest of $12,000.She receives a current distribution of $8,000 cash and equipment with a basis of $7,000.There is no potential gain under Sec.737.What is her basis in the equipment?

Under the check-the-box rules,an LLC with more than one member is taxed as a partnership unless it elects to be taxed as a corporation.

All states have adopted laws providing for limited liability companies.Describe a limited liability company (LLC).

When a retiring partner receives payments that exceed the value of that partner's partnership property,the excess payment is a guaranteed payment.

A partner can recognize gain,but not loss,on a liquidating distribution.

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

Can a partner recognize both a gain and a loss on the sale of a partnership interest? If so,under what conditions?

The XYZ Partnership owns the following assets on December 31: By how much must XYZ reduce its unrealized receivables to avoid meeting the substantially appreciated inventory test?

Identify which of the following statements is true.

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

Under Sec.751,unrealized receivables include potential Section 1245 or 1250 recapture on the partnership's depreciable property.

A partnership cannot recognize a gain or loss on a current distribution.

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