Exam 14: Partnership Taxation

Doug, Geoffrey, and Fredrick form a partnership and contribute the following assets: Geoffrey's building has a mortgage of $135,000 which the partnership assumes. 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 in each asset? d. What are the holding periods to the partnership for each asset? e. How would your answer change with respect to Geoffrey if his basis in the building was $85,000?

All income and expense items of a partnership that may be treated differently at the partner level must be "separately stated."

If Casey's partnership basis is only $100,000 and Cherie's basis is $200,000, there is no way both Casey and Cherie can be equal partners at 50% each in the partnership.

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?

A partner had the following items reported on a partnership Schedule K-1: The partner's self-employment income for the year is:

In 2014, Angel contributes land to a partnership with a basis of $12,000 and a FMV of $22,000. In 2015, when the FMV of the land is $28,000, the partnership distributes the land to Shelia, another partner. What is the basis of the land to Shelia assuming she has a $40,000 basis in her partnership interest?

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

Charley is a partner in Charley, Austin, Liz & Bass Partnership. Charley owned 25% from January 1, 2015 to April 1, 2015 when he bought both Liz's 25% and Bass's 25% interests. He owned 75% for the rest of the year. The partnership had ordinary income of $358,000 and $12,000 in long-term capital gains. Barring any special allocations in a partnership agreement, what is Charley's share of income (assume a 365-day year)?

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

A partnership has $23,000 of depreciation expense and $25,000 of Section 179 expense. How are the depreciation and Section 179 expenses reported?

Caroline, Jessica, and Samantha form a partnership. Caroline contributes a building, Jessica contributes cash and Samantha will operate the business. How much income must Samantha recognize?

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

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.

Typically, a partner does not recognize a gain when he or she receives a current distribution.

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

If only cash is contributed on the formation of a partnership, outside basis will equal inside basis.

Section 179 expense is reported as a(an):

Parker, a 25% partner in Delta Partnership, has a basis of $25,000 in his partnership interest. Parker receives a cash distribution of $24,000 at year-end. What is Parker's recognized gain or loss?

Bethany contributes a building to a partnership with a basis of $120,000 and a FMV of $200,000. Bethany's basis in her partnership interest would:

If a partner contributes services on the formation of a partnership, how much income does the service partner recognize, if any?