Question 1

When determining the guaranteed payment,which of the following statements is correct?

Accepted Answer

A) If the distributive share is less than the guaranteed minimum amount,the guaranteed payment is equal to the difference between the distributive share and the guaranteed minimum amount. 
B) If the distributive share is greater than the guaranteed minimum amount,the guaranteed payment is equal to the difference between the distributive share and the guaranteed minimum amount. 
C) Guaranteed payments are payments determined with regard to the partnership income. 
D) The distinction between guaranteed payments and distributive shares is clear in practice. 
A) If the distributive share is less than the guaranteed minimum amount,the guaranteed payment is equal to the difference between the distributive share and the guaranteed minimum amount. 
B) If the distributive share is greater than the guaranteed minimum amount,the guaranteed payment is equal to the difference between the distributive share and the guaranteed minimum amount. 
C) Guaranteed payments are payments determined with regard to the partnership income. 
D) The distinction between guaranteed payments and distributive shares is clear in practice.

Question 2

The WE Partnership reports the following items for its current tax year:   
What is the WE Partnership's ordinary income for the current year?

Accepted Answer

The income items,which are ordinary,tota

Question 3

Yee manages Huang real estate,a partnership in which she is also a partner.She receives 40% of all partnership income before guaranteed payments,but no less than $80,000 per year.In the current year,the partnership reports $400,000 in ordinary income.What is Yee's distributive share and her guaranteed payment?

Accepted Answer

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

Question 4

The RT Limited Partnership incurs the following expenses during the time that the partnership is being organized:
Attorneys' fees:   
Accountants' 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?

Accepted Answer

The attorneys' fees for drawing up the p

Question 5

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

Accepted Answer

Jeremey needs to know the basis of his p

Question 6

Dan purchases a 25% interest in the Haymarket Partnership for $20,000 on January 1,2010,and begins to materially participate in the partnership's business.The Haymarket Partnership uses the calendar year as its tax year.At the time of the purchase,the Haymarket Partnership has $2,000 in liabilities,and Dan's share is 25%.During the year,the Haymarket Partnership incurs $100,000 in losses and its liabilities increase by $4000.What is Dan's basis in his partnership interest on December 31,2010?

Accepted Answer

@#IMG-DLM& Dan is allocated $25,000 (0.25 × $100,0

Question 7

Bob contributes cash of $40,000 and Carol contributes land with a basis of $25,000 and an FMV of $40,000 to become equal partners in the BC Partnership.The partnership immediately obtains a $30,000 mortgage on the land and the partners will share the economic risk of loss equally.What are the two partners' bases in the partnership after these transactions are completed?

Accepted Answer

The answer of Bob contributes cash of $40,000 and Carol...

Question 8

Stan had a basis in his partnership interest at the beginning of last year of $30,000.There was no change in partnership liabilities during the year.His share of the partnership's ordinary loss last year was $40,000 and the partnership had no separately stated items.This year,Stan has a distributive share of ordinary income of $30,000.The taxable income from the partnership reported on Stan's personal income tax return this year (ignoring the at-risk and passive activity loss limitations)is

Accepted Answer

A) $10,000 ordinary loss. 
B) $20,000 ordinary income. 
C) $30,000 ordinary income. 
D) $40,000 ordinary income. 
A) $10,000 ordinary loss. 
B) $20,000 ordinary income. 
C) $30,000 ordinary income. 
D) $40,000 ordinary income.

Question 9

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?

Accepted Answer

A) $0 gain 
B) $4,000 ordinary income 
C) $4,000 short-term capital gain 
D) $12,000 ordinary income 
A) $0 gain 
B) $4,000 ordinary income 
C) $4,000 short-term capital gain 
D) $12,000 ordinary income

Question 10

Identify which of the following statements is true.

Accepted Answer

A) A contribution of services for a partnership interest is a tax-free transaction. 
B) For federal income tax purposes,formation of a partnership is governed by Sec.721. 
C) When a partnership assumes a liability on property contributed by a partner,the only effect on the contributing partner's basis in his or her partnership interest is that his or her basis will be increased by the amount of the liability assumed by the other partners. 
D) All of the above are false. 
A) A contribution of services for a partnership interest is a tax-free transaction. 
B) For federal income tax purposes,formation of a partnership is governed by Sec.721. 
C) When a partnership assumes a liability on property contributed by a partner,the only effect on the contributing partner's basis in his or her partnership interest is that his or her basis will be increased by the amount of the liability assumed by the other partners. 
D) All of the above are false.

Question 11

On December 31 of last year,Alex and Jackson become equal partners in the AJ Partnership with assets having a tax basis and FMV of $120,000.The partnership,which deals in securities,had no liabilities at the end of last year.In January of this year,Franklin contributes his investment securities with an FMV of $60,000 (purchased two years ago at a cost of $45,000)to become an equal partner in the new AJF Partnership.The securities,which are inventory to the partnership,are sold on December 15 of the current year for $90,000.What amount and character of gain from the sale of these securities should be allocated to Franklin?

Accepted Answer

A) $10,000 ordinary income 
B) $15,000 capital gain and $10,000 ordinary income 
C) $25,000 capital gain 
D) $25,000 ordinary income 
A) $10,000 ordinary income 
B) $15,000 capital gain and $10,000 ordinary income 
C) $25,000 capital gain 
D) $25,000 ordinary income

Question 12

A partnership cannot make charitable contributions.

Accepted Answer

A) True 
 B)False

Question 13

Yong contributes a machine having an adjusted basis of $20,000 and an FMV of $25,000 for a 10% partnership interest.Yong had taken $10,000 of depreciation prior to the contribution.The partnership has no liabilities.As a result of the contribution,Yong must recognize

Accepted Answer

A) no gain or loss. 
B) a $5,000 Sec.1245 gain. 
C) a $5,000 capital gain. 
D) $10,000 ordinary income. 
A) no gain or loss. 
B) a $5,000 Sec.1245 gain. 
C) a $5,000 capital gain. 
D) $10,000 ordinary income.

Question 14

Clark and Lewis are partners who share the profits and losses of the C&L Partnership 60% and 40%,respectively.The tax basis of each partner's interest in the partnership as of December 31 of last year was as follows: Clark,$14,000;Lewis,$12,000.During the current year,the partnership had ordinary income of $20,000 and a long-term capital loss of $10,000 from the sale of securities.The partnership made cash distributions proportionately to the two partners during this year totaling $20,000.What is the amount of Lewis's tax basis of his partnership interest on December 31 of the current year?

Accepted Answer

Lewis's basis = $12,

Question 15

Identify which of the following statements is false.

Accepted Answer

A) Jean and Blossom form an equal partnership.Jean contributes $10,000 cash and Blossom contributes property with a $10,000 FMV and a $5,000 basis.When the partnership sells the property contributed by Blossom for $10,000 shortly after the formation,Blossom must include the $5,000 gain in her income. 
B) In order to shift income/loss between partners,there must be substantial economic effect. 
C) The BB Partnership wants to make a special allocation of $10,000 of long-term capital gain to Bob and a special allocation of $10,000 of ordinary income to Briana.This allocation will have a substantial economic effect. 
D) Partners must make up negative balances in their capital accounts upon liquidation of the partnership. 
A) Jean and Blossom form an equal partnership.Jean contributes $10,000 cash and Blossom contributes property with a $10,000 FMV and a $5,000 basis.When the partnership sells the property contributed by Blossom for $10,000 shortly after the formation,Blossom must include the $5,000 gain in her income. 
B) In order to shift income/loss between partners,there must be substantial economic effect. 
C) The BB Partnership wants to make a special allocation of $10,000 of long-term capital gain to Bob and a special allocation of $10,000 of ordinary income to Briana.This allocation will have a substantial economic effect. 
D) Partners must make up negative balances in their capital accounts upon liquidation of the partnership.

Question 16

The partners of the MCL Partnership,Martin,Clark,and Lewis,share profits and losses in a ratio of 4:3:3,respectively.The tax basis of each partner,as of December 31 of the current year,is as follows: Martin,$7,200;Clark,$6,000;and Lewis,$2,500.During the current year,the partnership incurred an ordinary loss of $15,000.The loss is not reflected in the tax basis figures presented above.Nothing else occurs during the year that would affect the partners' bases.As a result of this loss,what amount should Martin,Clark,and Lewis report on their individual tax returns for the current year? What limitations (other than the Sec.704(d)loss limitations)may prevent them from deducting their losses in the current year?

Accepted Answer

The loss allocation is:
Martin: $15,000

Question 17

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

Accepted Answer

A) $10,000. 
B) $12,000. 
C) $14,000. 
D) $30,000. 
A) $10,000. 
B) $12,000. 
C) $14,000. 
D) $30,000.

Question 18

Jangyoun sells investment land having a $30,000 basis to a partnership in which he has a 60% partnership interest.The partnership pays $26,000 (FMV)for the land.Later,the partnership sells the investment land to a nonpartner for $31,000.On the sale of the land,the partnership must recognize a

Accepted Answer

A) $0 gain or loss. 
B) $1,000 capital gain. 
C) $4,000 capital gain and $1,000 Sec.1231 gain. 
D) $5,000 capital gain. 
A) $0 gain or loss. 
B) $1,000 capital gain. 
C) $4,000 capital gain and $1,000 Sec.1231 gain. 
D) $5,000 capital gain.

Question 19

Identify which of the following statements is true.

Accepted Answer

A) When adjusting a partner's basis in a partnership interest,the negative basis adjustments are made prior to the positive basis adjustments. 
B) Martin and Carlos formed an equal partnership to which Martin contributed $10,000 cash and Carlos contributed a building worth $10,000 with a basis of $2,000.In the first year of operation,the partnership suffered a $10,000 ordinary loss.Martin and Carlos can each deduct a $5,000 loss on their personal tax returns. 
C) Any distributive share of a loss that cannot be deducted by a partner because of the Sec.704(d)basis loss limitation is permanently lost. 
D) All of the above are false. 
A) When adjusting a partner's basis in a partnership interest,the negative basis adjustments are made prior to the positive basis adjustments. 
B) Martin and Carlos formed an equal partnership to which Martin contributed $10,000 cash and Carlos contributed a building worth $10,000 with a basis of $2,000.In the first year of operation,the partnership suffered a $10,000 ordinary loss.Martin and Carlos can each deduct a $5,000 loss on their personal tax returns. 
C) Any distributive share of a loss that cannot be deducted by a partner because of the Sec.704(d)basis loss limitation is permanently lost. 
D) All of the above are false.

Question 20

Limited partners must consider the at-risk,basis,and passive loss limitations when determining the amount of their deductible loss.

Accepted Answer

A) True 
 B)False

When determining the guaranteed payment,which of the following statements is correct?

The WE Partnership reports the following items for its current tax year: What is the WE Partnership's ordinary income for the current year?

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

Identify which of the following statements is true.

A partnership cannot make charitable contributions.

Yong contributes a machine having an adjusted basis of $20,000 and an FMV of $25,000 for a 10% partnership interest.Yong had taken $10,000 of depreciation prior to the contribution.The partnership has no liabilities.As a result of the contribution,Yong must recognize

Identify which of the following statements is false.

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

Jangyoun sells investment land having a $30,000 basis to a partnership in which he has a 60% partnership interest.The partnership pays $26,000 (FMV)for the land.Later,the partnership sells the investment land to a nonpartner for $31,000.On the sale of the land,the partnership must recognize a

Identify which of the following statements is true.

Limited partners must consider the at-risk,basis,and passive loss limitations when determining the amount of their deductible loss.

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

Special Partnership Issues

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 9: Partnership Formation and Operation

When determining the guaranteed payment,which of the following statements is correct?

The WE Partnership reports the following items for its current tax year: What is the WE Partnership's ordinary income for the current year?

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

Identify which of the following statements is true.

A partnership cannot make charitable contributions.

Yong contributes a machine having an adjusted basis of $20,000 and an FMV of $25,000 for a 10% partnership interest.Yong had taken $10,000 of depreciation prior to the contribution.The partnership has no liabilities.As a result of the contribution,Yong must recognize

Identify which of the following statements is false.

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

Jangyoun sells investment land having a $30,000 basis to a partnership in which he has a 60% partnership interest.The partnership pays $26,000 (FMV)for the land.Later,the partnership sells the investment land to a nonpartner for $31,000.On the sale of the land,the partnership must recognize a

Identify which of the following statements is true.

Limited partners must consider the at-risk,basis,and passive loss limitations when determining the amount of their deductible loss.

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

Special Partnership Issues

US Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Us Taxation of Foreign-Related Transactions

Filters