Question 1

If Josh's partnership basis was $5,000 and he received a distribution of land that had a basis of
$10,000,Josh would be required to recognize a $5,000 gain.

Accepted Answer

A) True 
 B)False  False

Question 2

Anna has a $25,000 basis in her partnership interest when she receives liquidating distributions from the partnership.Anna receives cash of $18,000 and computer equipment with a basis to the partnership of $15,000.What are the tax consequences of the liquidating distributions to Anna?

Accepted Answer

Anna recognizes no gain or loss on the liquidation.   Since computer equipment was distributed in liquidation,no loss can be recognized.The equipment then has a basis of $7,000 in the hands of Anna.

Question 3

A partner can recognize a loss on a liquidating distribution.

Accepted Answer

A) True 
 B)False  True

Question 4

Partnership income and losses are divided into two components: ordinary items and separately stated items.

Accepted Answer

A) True 
 B)False

Question 5

The term "step-into-the-shoes" means that the partnership starts a new depreciation period for any depreciable asset contributed to the partnership.

Accepted Answer

A) True 
 B)False

Question 6

A partner's basis in his or her partnership interest outside basis)is the sum of the money contributed plus the adjusted basis of property contributed.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is reported as ordinary income or expense from a partnership?

Accepted Answer

A) Gain on the sale of a Section 1231 asset. 
B) Depreciation expense. 
C) Dividend income. 
D) Section 179 expense. 
A) Gain on the sale of a Section 1231 asset. 
B) Depreciation expense. 
C) Dividend income. 
D) Section 179 expense.

Question 8

When a partner is released of a partnership liability,the partner is treated as receiving a money distribution,which reduces his or her partnership basis.

Accepted Answer

A) True 
 B)False

Question 9

Cameron has a basis in his partnership interest of $5,000.Cameron's share of partnership income is $5,000.He also receives a cash distribution from the partnership of $13,000.What is his gain or loss as a result of the distribution?

Accepted Answer

A) $3,000. 
B) $0. 
C) $5,000. 
D) $13,000. 
A) $3,000. 
B) $0. 
C) $5,000. 
D) $13,000.

Question 10

As a general rule,a distribution to a partner from a partnership is treated as:

Accepted Answer

A) A reduction in basis,and no gain or loss is recognized. 
B) A capital gain distribution. 
C) Ordinary income. 
D) A guaranteed payment. 
A) A reduction in basis,and no gain or loss is recognized. 
B) A capital gain distribution. 
C) Ordinary income. 
D) A guaranteed payment.

Question 11

Ordinary income includes interest income and dividend income received by the partnership.

Accepted Answer

A) True 
 B)False

Question 12

Generally,guaranteed payments do not have an impact on a partner's basis in the partnership interest.

Accepted Answer

A) True 
 B)False

Question 13

If Janelle's partnership basis was $5,000 and she received a distribution of land that had a basis of
$10,000,the basis of the land in Janelle's hands would be $10,000.

Accepted Answer

A) True 
 B)False

Question 14

Sabrina has a $12,000 basis in her S&B partnership interest.Sabrina receives a current cash distribution of $10,000 and equipment with a $5,000 basis FMV $6,000).What is Sabrina's recognized gain or loss?

Accepted Answer

A) $4,000. 
B) $0. 
C) $3,000. 
D) $16,000. 
A) $4,000. 
B) $0. 
C) $3,000. 
D) $16,000.

Question 15

Which of the following partnership items are not included in the self-employment income calculation?

Accepted Answer

A) Section 179 expense. 
B) Gain on the sale of partnership property. 
C) Guaranteed payments. 
D) Ordinary income. 
A) Section 179 expense. 
B) Gain on the sale of partnership property. 
C) Guaranteed payments. 
D) Ordinary income.

Question 16

When a partner increases his or her share of the partnership's liabilities,the liability increase is treated as a:

Accepted Answer

A) Money contribution. 
B) Money distribution. 
C) Recognition of income. 
D) Has no effect on the partner. 
A) Money contribution. 
B) Money distribution. 
C) Recognition of income. 
D) Has no effect on the partner.

Question 17

Molly has a $15,000 basis in her partnership interest when she receives a liquidating distribution from the partnership.Molly receives cash of $6,000.What is Molly's recognized gain or loss on the liquidating distribution?

Accepted Answer

A) $9,000). 
B) $0. 
C) $6,000). 
D) $15,000). 
A) $9,000). 
B) $0. 
C) $6,000). 
D) $15,000).

Question 18

Bryan,Shahin,and Michele form a partnership.Bryan and Shahin contribute inventory and a building,respectively.Michele agrees to perform all of the accounting and office work in exchange for a 10% interest.
   a.Do any of the partners recognize any gain? If so,how much and why?
b.What is each partner's basis in his or her partnership interest?
c.What is the basis to the partnership of each asset?

Accepted Answer

a.Michele will recognize $60,0

Question 19

Nondeductible partnership items do not decrease a partner's basis in the partnership interest.

Accepted Answer

A) True 
 B)False

Question 20

Partner Tami a 20% partner)had the following items reported to her on a partnership Schedule K-1:   Tami had a basis in her partnership interest of $14,000 at the beginning of the year.Additionally,the partnership has recourse liabilities of $100,000 outstanding at the end of the year.What is Tami's basis in her partnership interest at the end of the year?

Accepted Answer

A) $7,000. 
B) $11,200. 
C) $31,200. 
D) $23,200. 
A) $7,000. 
B) $11,200. 
C) $31,200. 
D) $23,200.

If Josh's partnership basis was $5,000 and he received a distribution of land that had a basis of $10,000,Josh would be required to recognize a $5,000 gain.

Anna has a $25,000 basis in her partnership interest when she receives liquidating distributions from the partnership.Anna receives cash of $18,000 and computer equipment with a basis to the partnership of $15,000.What are the tax consequences of the liquidating distributions to Anna?

A partner can recognize a loss on a liquidating distribution.

Partnership income and losses are divided into two components: ordinary items and separately stated items.

The term "step-into-the-shoes" means that the partnership starts a new depreciation period for any depreciable asset contributed to the partnership.

A partner's basis in his or her partnership interest outside basis)is the sum of the money contributed plus the adjusted basis of property contributed.

Which of the following is reported as ordinary income or expense from a partnership?

When a partner is released of a partnership liability,the partner is treated as receiving a money distribution,which reduces his or her partnership basis.

Cameron has a basis in his partnership interest of $5,000.Cameron's share of partnership income is $5,000.He also receives a cash distribution from the partnership of $13,000.What is his gain or loss as a result of the distribution?

As a general rule,a distribution to a partner from a partnership is treated as:

Ordinary income includes interest income and dividend income received by the partnership.

Generally,guaranteed payments do not have an impact on a partner's basis in the partnership interest.

If Janelle's partnership basis was $5,000 and she received a distribution of land that had a basis of $10,000,the basis of the land in Janelle's hands would be $10,000.

Sabrina has a $12,000 basis in her S&B partnership interest.Sabrina receives a current cash distribution of $10,000 and equipment with a $5,000 basis FMV $6,000).What is Sabrina's recognized gain or loss?

Which of the following partnership items are not included in the self-employment income calculation?

When a partner increases his or her share of the partnership's liabilities,the liability increase is treated as a:

Molly has a $15,000 basis in her partnership interest when she receives a liquidating distribution from the partnership.Molly receives cash of $6,000.What is Molly's recognized gain or loss on the liquidating distribution?

Nondeductible partnership items do not decrease a partner's basis in the partnership interest.

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income Line 12 of Form 1040 and Schedule C

Capital Gains and Other Sales of Property Schedule D and Form 4797

Rental Property, royalties, and Income From Flow-Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040, lines 46 Through 54 and Lines 66a Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Corporate Taxation

Filters

Exam 14: Partnership Taxation

If Josh's partnership basis was $5,000 and he received a distribution of land that had a basis of $10,000,Josh would be required to recognize a $5,000 gain.

Anna has a $25,000 basis in her partnership interest when she receives liquidating distributions from the partnership.Anna receives cash of $18,000 and computer equipment with a basis to the partnership of $15,000.What are the tax consequences of the liquidating distributions to Anna?

A partner can recognize a loss on a liquidating distribution.

Partnership income and losses are divided into two components: ordinary items and separately stated items.

The term "step-into-the-shoes" means that the partnership starts a new depreciation period for any depreciable asset contributed to the partnership.

A partner's basis in his or her partnership interest outside basis)is the sum of the money contributed plus the adjusted basis of property contributed.

Which of the following is reported as ordinary income or expense from a partnership?

When a partner is released of a partnership liability,the partner is treated as receiving a money distribution,which reduces his or her partnership basis.

Cameron has a basis in his partnership interest of $5,000.Cameron's share of partnership income is $5,000.He also receives a cash distribution from the partnership of $13,000.What is his gain or loss as a result of the distribution?

As a general rule,a distribution to a partner from a partnership is treated as:

Ordinary income includes interest income and dividend income received by the partnership.

Generally,guaranteed payments do not have an impact on a partner's basis in the partnership interest.

If Janelle's partnership basis was $5,000 and she received a distribution of land that had a basis of $10,000,the basis of the land in Janelle's hands would be $10,000.

Sabrina has a $12,000 basis in her S&B partnership interest.Sabrina receives a current cash distribution of $10,000 and equipment with a $5,000 basis FMV $6,000).What is Sabrina's recognized gain or loss?

Which of the following partnership items are not included in the self-employment income calculation?

When a partner increases his or her share of the partnership's liabilities,the liability increase is treated as a:

Molly has a $15,000 basis in her partnership interest when she receives a liquidating distribution from the partnership.Molly receives cash of $6,000.What is Molly's recognized gain or loss on the liquidating distribution?

Nondeductible partnership items do not decrease a partner's basis in the partnership interest.

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income Line 12 of Form 1040 and Schedule C

Capital Gains and Other Sales of Property Schedule D and Form 4797

Rental Property, royalties, and Income From Flow-Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040, lines 46 Through 54 and Lines 66a Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Corporate Taxation

Filters