Question 1

Identify which of the following statements is true.

Accepted Answer

A) A general partner's share of recourse debt is based on his or her economic risk of loss,and his or her share of nonrecourse debt is predominantly based on his or her share of partnership profits. 
B) A partner's basis for his or her partnership interest is increased by his or her share of the partnership's tax-exempt income. 
C) If all tax-exempt interest income is distributed when received by a partnership,the partners' bases are the same after the distribution as they were before the tax-exempt interest was received by the partnership. 
D) All of the above are true. 
A) A general partner's share of recourse debt is based on his or her economic risk of loss,and his or her share of nonrecourse debt is predominantly based on his or her share of partnership profits. 
B) A partner's basis for his or her partnership interest is increased by his or her share of the partnership's tax-exempt income. 
C) If all tax-exempt interest income is distributed when received by a partnership,the partners' bases are the same after the distribution as they were before the tax-exempt interest was received by the partnership. 
D) All of the above are true.

Question 2

The holding period of a partnership interest acquired in exchange for a contributed capital asset begins on the date the partner transfers the asset to the partnership.

Accepted Answer

A) True 
 B)False

Question 3

A partner's basis for his or her partnership interest is increased by his share of the partnership's tax-exempt income.

Accepted Answer

A) True 
 B)False

Question 4

Ali,a contractor,builds an office building for a construction partnership in exchange for a capital and profits interest in the partnership worth $500,000.Which of the following statements is correct?

Accepted Answer

A) Ali recognizes $500,000 of ordinary income and the partnership can deduct $500,000 in the current year. 
B) Ali recognizes no income and the partnership can deduct nothing in the current year. 
C) Ali recognizes $500,000 ordinary income and the partnership deducts the $500,000 over the building's MACRS recovery period as a depreciation expense. 
D) Ali recognizes ordinary income in the current year in an amount equal to the depreciation deduction the partnership claims this year for the $500,000 capitalized amount. 
A) Ali recognizes $500,000 of ordinary income and the partnership can deduct $500,000 in the current year. 
B) Ali recognizes no income and the partnership can deduct nothing in the current year. 
C) Ali recognizes $500,000 ordinary income and the partnership deducts the $500,000 over the building's MACRS recovery period as a depreciation expense. 
D) Ali recognizes ordinary income in the current year in an amount equal to the depreciation deduction the partnership claims this year for the $500,000 capitalized amount.

Question 5

At the formation of the BD Partnership,Betty contributes land with a basis of $10,000 and an FMV of $30,000 and Dick contributes cash of $30,000.Betty and Dick share profits and losses equally.When the land is sold two years later for $50,000,Betty must recognize a gain of

Accepted Answer

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

Question 6

William and Irene each contribute $20,000 cash to the WI Partnership on January 1 of last year.William and Irene share profits and losses equally.Last year,the partnership reported tax-exempt interest income of $4,000.This year,each partner receives $1,000 of the tax-exempt interest income in a cash distribution.There are no partnership liabilities and no other income,loss,contributions,or distributions during both years.William's basis in the partnership interest following these transactions is

Accepted Answer

A) $19,000. 
B) $20,000. 
C) $21,000. 
D) $22,000. 
A) $19,000. 
B) $20,000. 
C) $21,000. 
D) $22,000.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

On January 2 of the current year,Calloway and Taylor contribute cash equally to form the CT Partnership.Calloway and Taylor share profits and losses in a ratio of 75% and 25%,respectively.The partnership's ordinary income for the year was $40,000.Calloway received a distribution of $5,000 during the year.What is Calloway's share of taxable income for the year?

Accepted Answer

A) $5,000 
B) $10,000 
C) $20,000 
D) $30,000 
A) $5,000 
B) $10,000 
C) $20,000 
D) $30,000

Question 9

Formation of a partnership requires legal documentation filed with the Secretary of State.

Accepted Answer

A) True 
 B)False

Question 10

Janice has a 30% interest in the Jansen Partnership.She is to receive a guaranteed payment for deductible services of $50,000.The partnership reports $30,000 of ordinary income and a $100,000 long-term capital gain before deducting the guaranteed payment.What is her income from the partnership?

Accepted Answer

Janice will report the guaranteed paymen

Question 11

Meg and Abby are equal partners in the AM Partnership,which earns $40,000 ordinary income,$6,000 long-term capital gain (LTCG),and $2,000 Sec.1231 loss during the current year.What is the amount and character of income that must be reported on Abby's tax return for this year's partnership operations?

Accepted Answer

A) $20,000 ordinary income,$3,000 LTCG,$1,000 Sec.1231 loss 
B) $19,000 ordinary income,$3,000 LTCG 
C) $23,000 ordinary income,$1,000 Sec.1231 loss 
D) $22,000 ordinary income 
A) $20,000 ordinary income,$3,000 LTCG,$1,000 Sec.1231 loss 
B) $19,000 ordinary income,$3,000 LTCG 
C) $23,000 ordinary income,$1,000 Sec.1231 loss 
D) $22,000 ordinary income

Question 12

No gain is recognized on the sale of property between a partnership and a more-than-50% partner.

Accepted Answer

A) True 
 B)False

Question 13

Identify which of the following statements is true.

Accepted Answer

A) A partner's relief of debt is treated as if the partner receives a cash distribution. 
B) When a partnership assumes any liabilities of the transferor,the transferor has an increase in the basis of his or her partnership interest. 
C) Gain recognized by a contributing partner because of the assumption of liabilities by the partnership increases the partnership's basis in the contributed property. 
D) All of the above are false. 
A) A partner's relief of debt is treated as if the partner receives a cash distribution. 
B) When a partnership assumes any liabilities of the transferor,the transferor has an increase in the basis of his or her partnership interest. 
C) Gain recognized by a contributing partner because of the assumption of liabilities by the partnership increases the partnership's basis in the contributed property. 
D) All of the above are false.

Question 14

Identify which of the following statements is true.

Accepted Answer

A) Tax-exempt interest received by a partnership is taxable to the partners if distributed. 
B) Partnership gains and losses from two different casualty and theft occurrences in one year are passed through to the partners as two separate items. 
C) The amount and character of any gains/losses is determined at the partnership level. 
D) All of the above are false. 
A) Tax-exempt interest received by a partnership is taxable to the partners if distributed. 
B) Partnership gains and losses from two different casualty and theft occurrences in one year are passed through to the partners as two separate items. 
C) The amount and character of any gains/losses is determined at the partnership level. 
D) All of the above are false.

Question 15

For a 20% interest in partnership capital,profits,and losses,Kasi contributes a machine having a basis of $30,000 and an FMV of $40,000.The partnership also assumes a $24,000 recourse liability secured by the machine.The partnership has $6,000 in recourse liabilities immediately preceding Kasi's contributions.Partners share the economic risk of loss from recourse liabilities in the same way they share partnership losses.Kasi's basis in the partnership interest is

Accepted Answer

A) $10,800. 
B) $12,000. 
C) $13,200. 
D) $30,000. 
A) $10,800. 
B) $12,000. 
C) $13,200. 
D) $30,000.

Identify which of the following statements is true.

The holding period of a partnership interest acquired in exchange for a contributed capital asset begins on the date the partner transfers the asset to the partnership.

A partner's basis for his or her partnership interest is increased by his share of the partnership's tax-exempt income.

Ali,a contractor,builds an office building for a construction partnership in exchange for a capital and profits interest in the partnership worth $500,000.Which of the following statements is correct?

At the formation of the BD Partnership,Betty contributes land with a basis of $10,000 and an FMV of $30,000 and Dick contributes cash of $30,000.Betty and Dick share profits and losses equally.When the land is sold two years later for $50,000,Betty must recognize a gain of

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

Formation of a partnership requires legal documentation filed with the Secretary of State.

Janice has a 30% interest in the Jansen Partnership.She is to receive a guaranteed payment for deductible services of $50,000.The partnership reports $30,000 of ordinary income and a $100,000 long-term capital gain before deducting the guaranteed payment.What is her income from the partnership?

No gain is recognized on the sale of property between a partnership and a more-than-50% partner.

Identify which of the following statements is true.

Identify which of the following statements is true.

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

Identify which of the following statements is true.

The holding period of a partnership interest acquired in exchange for a contributed capital asset begins on the date the partner transfers the asset to the partnership.

A partner's basis for his or her partnership interest is increased by his share of the partnership's tax-exempt income.

Ali,a contractor,builds an office building for a construction partnership in exchange for a capital and profits interest in the partnership worth $500,000.Which of the following statements is correct?

At the formation of the BD Partnership,Betty contributes land with a basis of $10,000 and an FMV of $30,000 and Dick contributes cash of $30,000.Betty and Dick share profits and losses equally.When the land is sold two years later for $50,000,Betty must recognize a gain of

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

Formation of a partnership requires legal documentation filed with the Secretary of State.

Janice has a 30% interest in the Jansen Partnership.She is to receive a guaranteed payment for deductible services of $50,000.The partnership reports $30,000 of ordinary income and a $100,000 long-term capital gain before deducting the guaranteed payment.What is her income from the partnership?

No gain is recognized on the sale of property between a partnership and a more-than-50% partner.

Identify which of the following statements is true.

Identify which of the following statements is true.

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