Exam 10: Special Partnership Issues

What is an electing large partnership? What are the advantages to the partnership of electing to be taxed under the electing large partnership rules?

Sally is a calendar-year taxpayer who owns a 30% capital and profits interest in the SEM Partnership.Eric sells the remaining 70% capital and profits interest to Michelle on October 3.The partnership year-end is March 31 as permitted by the IRS for business purposes.Which of the following statements is correct?

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

Identify which of the following statements is true.

Identify which of the following statements is false.

The CHS Partnership's balance sheet presented below is prepared on a cash basis at September 30 of the current year. Cindy withdraws from the partnership under an agreement whereby she takes one-third of each of the three assets and assumes $10,000 of the notes payable.Her basis for the partnership interest before any distribution is $25,000.What gain/loss should she report for tax purposes?

Identify which of the following statements is true.

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 are the amount and character of Tony's gain?

The definition of "unrealized receivable" does not include the

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

Adnan had an adjusted basis of $11,000 for his interest in the Adnan and Donnell Partnership on December 31.On this date,Adnan received from the partnership,in complete liquidation of his interest,$10,000 cash and land with a $2,000 basis to the partnership and a $3,000 FMV.What is Adnan's basis for the land distributed to him?

Eicho's interest in the DPQ Partnership is terminated when her basis in the partnership is $70,000.She receives a liquidating distribution of $20,000 cash and inventory with a $24,000 basis and a $40,000 FMV.She also receives,as part of the distribution,a desk that has a $100 basis and a $200 FMV to the partnership.What is her gain or loss,and what is her basis in the items received?

What are the advantages of a firm being formed as a limited liability company (LLC)instead of as a limited partnership?

Identify which of the following statements is true.

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

Sean,Penelope,and Juan formed the SPJ partnership by each contributing assets with a basis and fair market value of $200,000.In the following year,Penelope sold her one-third interest to Pedro for $225,000.At the time of the sale,the SPJ partnership had the following balance sheet: Shortly after Pedro became a partner,SPJ sold the land for $475,000.What are the tax consequences of the sale to Pedro and the partnership (1)assuming there is no Section 754 election in place,and (2)assuming the partnership has a valid Section 754 election?

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

Eicho's interest in the DPQ Partnership is terminated when her basis in the partnership is $70,000.She receives a liquidating distribution of $20,000 cash and inventory with a $24,000 basis and a $40,000 FMV.What is her gain or loss,and what is her basis in the inventory received?

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

The limited liability company (LLC)has become a popular business form because of its limited liability protection for its owner.The S corporation also provides limited liability protection for its owner.What advantages does an LLC provide that are not available with an S corporation?