Exam 17: Partnerships and S Corporations

Sandy and Larry each have a 50% interest in SL Partnership.The partnership and the individuals file on a calendar-year basis.In 2016,SL Partnership had a $30,000 ordinary loss.Sandy's adjusted basis in her partnership interest on January 1,2016,was $12,000.In 2017,SL Partnership had ordinary income of $20,000.Assuming there were no other adjustments to Sandy's basis in the partnership,what amount of partnership income (loss) would Sandy show on her 2016 and 2017 individual income tax returns?

Martha transferred property with a FMV of $60,000 (adjusted basis $30,000),which is subject to a $40,000 mortgage in exchange for a one-third interest in a partnership.The partnership has no other liabilities.The partners of MNO own the partnership equally.The partnership's basis in the property contributed is

Stephanie owns a 25% interest in a qualifying S corporation.Stephanie's basis in the stock was $40,000 at the end of the year after adjustments are made for capital contributions and distributions (but not operating results).Stephanie also loaned the S corporation $10,000 this year.The S corporation incurred a $240,000 ordinary loss this year.Assume that next year the S corporation's ordinary income is $160,000.Stephanie's basis in her stock at the end of next year is

Mark receives a nonliquidating distribution of $10,000 cash and a parcel of land having an adjusted basis of $18,000 and a fair market value of $25,000. a.Mark's basis in his partnership interest prior to the distribution is $50,000. (1) How much income will the partnership recognize due to the distribution? (2) How much income will Mark recognize due to the distribution? (3) What is Mark's basis in his partnership interest after the distribution ? (4) What is Mark's basis in the land? b. Assume Mark's basis in his partnership interest is instead $22,000 and redetermine the responses to questions (1) through (4).

Oliver receives a nonliquidating distribution of land having a $25,000 adjusted basis and a $32,000 FMV from the OK Partnership.At the time of the distribution,Oliver's basis in his partnership interest is $30,000. a.What is the amount of recognized gain or loss on the distribution? b.What is Oliver's basis in his partnership interest following the distribution? c.What is Oliver's basis in the land?

If partners having a majority interest in the partnership do not have the same tax year,the partnership uses the same tax year as all of its principal partners.Principal partners are those with 10% or greater interest in the partnership.

Why are some partnership items separately stated?

Edith contributes land having $100,000 FMV and a $85,000 adjusted basis,which is subject to a $66,000 mortgage in exchange for a one-third interest in the EHK Partnership.The partnership owes no other liabilities.After the contribution,Kate,Edith,and Helen share profits and losses equally and each has a one-third interest in the partnership capital.Assume that Kate has a basis in her partnership interest of $50,000 before Edith's contribution to the partnership.The effect of Edith's contribution on partner Kate's basis is to

Joey and Bob each have 50% interest in a Partnership.Both Joey and the partnership file returns on a calendar-year basis.Partnership Q had a $12,000 loss in 2016.Joey's adjusted basis in his partnership interest on January 1,2016,was $5,000.In 2017,the partnership had a profit of $10,000.Assuming there were no other adjustments to Joey's basis in the partnership,what amount of partnership income (loss) should Joey show on his 2016 and 2017 individual income tax returns?

What is the primary purpose of Form 1065,Partnership Tax Return?

A partnership sells an asset for a gain.The asset had been transferred to the partnership two years ago by Partner J in exchange for a partnership interest.The asset was worth substantially more than its cost as of the transfer date.The partnership gain will be allocated to all of the partners in accordance with their profit and loss sharing ratios.

When capital or Sec.1231 assets are transferred to a partnership in exchange for a partnership interest qualifying under Sec.721,the holding period for the partnership interest includes the holding period of the contributed property.

Atiqa receives a nonliquidating distribution of land from her partnership.The partnership purchased the land five years ago for $20,000.At the time of the distribution,it is worth $28,000.Prior to the distribution,Atiqa's basis in her partnership interest is $37,000.Due to the distribution Atiqa and the partnership will recognize income of

Scott provides accounting services worth $40,000 to the ABC Partnership in exchange for a 20% interest in the capital and profits of the partnership.The tax result to Scott is

Which of the following will be separately stated by a partnership reporting its operations for the year to the IRS?

Tony is the 100% shareholder of a corporation established five years ago.It has always been an S corporation.After adjustment for this year's corporate income,but before taking distributions into account,Tony has a $50,000 stock basis.The corporation pays Tony a $40,000 cash distribution.As a result of this distribution,Tony will have an ending stock basis and recognized income of

Discuss whether a C corporation,a partnership,or an S corporation form of organization would be preferred if net operating losses are anticipated in the initial years of operation.

Which of the following is not a requirement to be an electing large partnership?

Ordinary losses and separately stated deduction and loss items that exceed a partner's basis carry over indefinitely until the partner has a positive partnership basis.

What is the effect of a change in a partner's interest in the partnership during the year?