Question 1

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 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 assets. 
D) All of the above are false.

Question 2

The Tandy Partnership owns the following assets on December 31:
   
Is the partnership's inventory considered to be substantially appreciated for purposes of Sec.751? Show your work.

Accepted Answer

For purposes of the substantially apprec

Question 3

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 4

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 5

The Principle Limited Partnership has more than 300 partners and is publicly traded.The Principle was grandfathered under the 1987 Tax Act and has consistently been taxed as a partnership.In the current year,The Principle Limited Partnership will continue to be very profitable and will continue to pay out about 30% of its income to its owners each year.The managing partners of The Principle want to consider the firm's options for taxation in the current and later years.

Accepted Answer

What method should The Principle Limited

Question 6

If a partnership chooses to form an LLC,under the check-the-box rules,and assuming no elections are made,the entity will be taxed as

Accepted Answer

A) a partnership if it has more than one member. 
B) an S corporation. 
C) a C corporation. 
D) Unable to determine from the facts presented. 
A) a partnership if it has more than one member. 
B) an S corporation. 
C) a C corporation. 
D) Unable to determine from the facts presented.

Question 7

Steve sells his 20% partnership interest having a $28,000 basis to Nancy for $40,000 cash.At the time of the sale,the partnership has no liabilities and its assets are as follows:
 
The receivables and inventory are Sec.751 assets.There is no agreement concerning the allocation of the sales price.Steve must recognize

Accepted Answer

A) no gain or loss. 
B) $12,000 ordinary income. 
C) $12,000 capital gain. 
D) $14,000 ordinary income and $2,000 capital loss. 
A) no gain or loss. 
B) $12,000 ordinary income. 
C) $12,000 capital gain. 
D) $14,000 ordinary income and $2,000 capital loss.

Question 8

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 9

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 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 will Jerry's basis be in these assets?

Accepted Answer

Generally,the partner's basis

Question 11

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 12

When Rachel's basis in her interest in the RST Partnership is $40,000,she receives a current distribution of office equipment.The equipment has an FMV of $60,000 and a basis of $50,000.Rachel will not use the office equipment in a business activity.What tax issues should Rachel consider with respect to the distribution?

Accepted Answer

•Does Rachel recognize a gain or loss on

Question 13

Susan contributed land with a basis of $6,000 and an FMV of $10,000 to the SH Partnership two years ago to acquire her partnership interest.This year,the land is distributed to Harry when its FMV is $11,000.No other distributions have been made since Susan became a partner.When the land is distributed,the partnership's basis in the land immediately before distribution is increased by

Accepted Answer

A) $0. 
B) $1,000. 
C) $4,000. 
D) $5,000. 
A) $0. 
B) $1,000. 
C) $4,000. 
D) $5,000.

Question 14

The LM Partnership terminates for tax purposes on July 15 when Latasha sells her 60% capital and profits interest to Zoe for $100,000.The partnership has no liabilities,and its assets at the time of termination are as follows:
 
Marika,a 40% partner in the LM Partnership,has a $64,800 basis in her partnership interest (outside basis)at the time of the termination.She has held her LM Partnership interest for three years at the time of the termination.The bases of Marika and Zoe in the new LM Partnership is:

Accepted Answer

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

Question 15

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 16

Identify which of the following statements is true.

Accepted Answer

A) When a partnership is divided into two or more new partnerships,all of the resulting partnerships must be considered new partnerships. 
B) A partnership is "publicly traded" only if its interests are traded on an established securities exchange. 
C) A limited liability company is a form of business entity that combines the legal benefits of the corporate form with the tax benefits of the partnership form. 
D) All of the above are false. 
A) When a partnership is divided into two or more new partnerships,all of the resulting partnerships must be considered new partnerships. 
B) A partnership is "publicly traded" only if its interests are traded on an established securities exchange. 
C) A limited liability company is a form of business entity that combines the legal benefits of the corporate form with the tax benefits of the partnership form. 
D) All of the above are false.

Question 17

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 18

On December 31,Kate sells her 20% interest (with a basis of $18,000 which,of course,includes a share of partnership liabilities)in the KLM Partnership to Karl for $27,000 cash plus assumption of her $6,000 share of liabilities.On that date,the partnership has the following balance sheet:

What are the amount and character of the gain that Kate must recognize on the sale?

Accepted Answer

The answer of On December 31,Kate sells her 20% interest...

Question 19

Identify which of the following statements is true.

Accepted Answer

A) John Albin is a retired partner of Brill & Crum,a personal service partnership.Albin has not rendered any services to Brill & Crum since his retirement six years ago.Under the provisions of Albin's retirement agreement,Brill & Crum is obligated to pay Albin 10% of the partnership's net income each year through the end of the current year.In compliance with the agreement,Brill & Crum pay Albin $25,000 in the current year.Albin should treat this $25,000 as a long-term capital gain. 
B) An exchange of partnership interests in different partnerships qualifies under the like-kind exchange rules. 
C) The payment for partnership property to a retiring partner is not deductible by the partnership and often not income to the retiring partner. 
D) All of the above are false. 
A) John Albin is a retired partner of Brill & Crum,a personal service partnership.Albin has not rendered any services to Brill & Crum since his retirement six years ago.Under the provisions of Albin's retirement agreement,Brill & Crum is obligated to pay Albin 10% of the partnership's net income each year through the end of the current year.In compliance with the agreement,Brill & Crum pay Albin $25,000 in the current year.Albin should treat this $25,000 as a long-term capital gain. 
B) An exchange of partnership interests in different partnerships qualifies under the like-kind exchange rules. 
C) The payment for partnership property to a retiring partner is not deductible by the partnership and often not income to the retiring partner. 
D) All of the above are false.

Question 20

David sells his one-third partnership interest to Diana for $60,000 when his basis in the partnership interest is $48,000.On the date of sale,the partnership has no liabilities and the following assets:   
The building is depreciated on a straight-line basis.What tax issues should David and Diana consider with respect to the sale transaction?

Accepted Answer

•Does the partnership have Sec.751 asset

Identify which of the following statements is true.

The Tandy Partnership owns the following assets on December 31: Is the partnership's inventory considered to be substantially appreciated for purposes of Sec.751? Show your work.

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 partnership chooses to form an LLC,under the check-the-box rules,and assuming no elections are made,the entity will be taxed as

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.

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

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 will Jerry's basis be in these assets?

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

Identify which of the following statements is true.

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

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

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

Identify which of the following statements is true.

The Tandy Partnership owns the following assets on December 31: Is the partnership's inventory considered to be substantially appreciated for purposes of Sec.751? Show your work.

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 partnership chooses to form an LLC,under the check-the-box rules,and assuming no elections are made,the entity will be taxed as

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.

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

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 will Jerry's basis be in these assets?

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

Identify which of the following statements is true.

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

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

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