Exam 14: Partnership Taxation

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?

Which of the following is reported as a separately stated item from a partnership?

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

Partner Spence had the following items reported on a partnership Schedule K-1: Spence had a basis in his partnership interest of $23,000 at the beginning of the year. What is Spence's basis in his partnership interest at the end of the year?

How does a partner treat premiums on health insurance provided by the partnership?

Latesha contributes a building with a FMV of $125,000 and a basis of $115,000 to a partnership on January 4, 2012. On December 15, 2015, the partnership distributed the building to Katie, a partner in the same partnership. At distribution, the building had a FMV of $129,000. a. What is the effect of the distribution on Latesha, if any? b. What is the effect of the distribution to Katie?

All income/gain and expense/loss items affect a partner's basis in his or her partnership interest.

A partner can recognize a loss on a liquidating distribution.

Rental income and expenses are treated as:

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

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?

Raul contributes the following assets to a partnership for a 50% interest: What is Raul's basis in his partnership interest?

Miguel contributes land to a partnership with a basis of $12,000 and a FMV of $18,000. How much gain will Miguel recognize?

Liquidation occurs when a partner's entire interest is redeemed by the partnership.

Paris, a 60% partner in Omega Partnership, has a basis of $25,000 in her partnership interest. Paris receives a cash distribution of $24,000 at year-end. What is Paris's basis in her partnership interest at the end of the year?

Rita has a beginning basis in a partnership of $43,000. Rita's share of income and expense from the partnership consists of the following amounts: a. What items are separately stated? b. What is Rita's self-employment income? c. Calculate Rita's partnership basis at the end of the year.

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 basis in the equipment received?

A partner never recognizes a gain or loss on the formation of a partnership.

Upon the sale of a partnership interest, a partner must recognize ordinary income if the partnership has substantially appreciated inventory or unrealized receivables.

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.