Question 1

Because a partnership does not pay taxes,a partnership is not recognized as a legal entity under civil law.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is a not true about an LLC?

Accepted Answer

A) LLCs are not required to have a general partner. 
B) LLC members can participate in the management of the business. 
C) Taxable income and losses pass through to the owners. 
D) An LLC must have at least two members. 
A) LLCs are not required to have a general partner. 
B) LLC members can participate in the management of the business. 
C) Taxable income and losses pass through to the owners. 
D) An LLC must have at least two members.

Question 3

An equal partnership is formed by Rita and Gerry.Rita contributes cash of $10,000 and a building with a fair market value of $150,000,adjusted basis of $55,000 and subject to a liability of $60,000.Gerry contributes cash of $100,000.What is the partnership's basis in the building contributed by Rita?

Accepted Answer

A) $55,000 
B) $60,000 
C) $90,000 
D) $150,000 
E) None of the above 
A) $55,000 
B) $60,000 
C) $90,000 
D) $150,000 
E) None of the above

Question 4

Limited liability companies may operate in more than one state.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following items must be reported separately from ordinary income or loss on a partnership return?

Accepted Answer

A) Capital losses 
B) Miscellaneous income 
C) Cost of goods sold 
D) Sales income 
E) None of the above 
A) Capital losses 
B) Miscellaneous income 
C) Cost of goods sold 
D) Sales income 
E) None of the above

Question 6

The tax year of a partnership generally closes upon entry of a new 20% partner.

Accepted Answer

A) True 
 B)False

Question 7

Michael invests in Buxus Interests,a partnership.Michael's capital contribution to the partnership consists of $10,000 cash and equipment with an adjusted basis of $120,000 (fair market value of $150,000)subject to a nonrecourse liability of $60,000.
a.Calculate the amount that Michael is at-risk in the activity after making the above contribution?
b.If Michael's share of the partnership loss in the year after he makes the contribution is $150,000,how much of the loss may be deducted in that year (before considering the limitations on passive losses)? Assume the partnership had no other transactions.
c.If Michael has any nondeductible loss in part b,what may Michael do with the nondeductible loss?

Accepted Answer

The answer of Michael invests in Buxus Interests,a partnership.Michael's capital...

Question 8

Income from a partnership is taxed to the partner only if the partner receives the income as a distribution during the year.

Accepted Answer

A) True 
 B)False

Question 9

An equal partnership is formed by Rita and Gerry.Rita contributes cash of $10,000 and a building with a fair market value of $150,000,adjusted basis of $55,000,and subject to a liability of $60,000.Gerry contributes cash of $100,000.What is Rita's basis in her partnership interest immediately after formation of the partnership?

Accepted Answer

A) $25,000 
B) $35,000 
C) $65,000 
D) $70,000 
E) None of the above 
A) $25,000 
B) $35,000 
C) $65,000 
D) $70,000 
E) None of the above

Question 10

If Margo and Bruce purchase and operate an ice cream store,for tax purposes they have formed a partnership.

Accepted Answer

A) True 
 B)False

Question 11

Partnership income is taxed at the same tax rates as the income of corporations.

Accepted Answer

A) True 
 B)False

Question 12

Rochelle owns 40 percent of a partnership and her brother owns the remaining 60 percent interest.During the current tax year,Rochelle sold a building to the partnership for $180,000,to be used for the partnership's office.She had held the building for 3 years at the time of the sale.
a.Assuming Rochelle's basis in the building was $200,000,what is the amount and nature of her gain or loss?
b.Assuming Rochelle's basis in the building was $150,000,what is the amount and nature of her gain or loss?

Accepted Answer

The answer of Rochelle owns 40 percent of a partnership...

Question 13

In general,income is recognized by the partner when a partnership interest is received in exchange for services rendered to the partnership.

Accepted Answer

A) True 
 B)False

Question 14

Partnership losses that are not used because a partner's basis in the partnership interest is zero may not be carried forward and are lost by the partner.

Accepted Answer

A) True 
 B)False

Question 15

Salix Associates is a partnership with an October 31 year-end.For the fiscal year ended October 31,2017,Salix Associates reported ordinary income of $100,000,after deducting guaranteed payments.Max,a calendar year taxpayer,is a 30 percent partner in the partnership and received $2,000 monthly as a guaranteed payment for the calendar year 2016,and $2,100 monthly for the calendar year 2017.What is the total income from the partnership that Max should report on his 2017 individual income tax return?

Accepted Answer

A) $30,000 
B) $54,200 
C) $55,000 
D) $55,200 
E) None of the above 
A) $30,000 
B) $54,200 
C) $55,000 
D) $55,200 
E) None of the above

Question 16

J.Bean and D.Counter formed a partnership.During the current year,the partnership had the following income and expenses:
​
   
a.Calculate the net ordinary income.
b.List all of the other items that need to be separately reported.
c.If the partnership is on a calendar year tax basis,when is the partnership tax return due?

Accepted Answer

The answer of J.Bean and D.Counter formed a partnership.During the...

Question 17

Guaranteed payments made by a partnership must be made to individuals other than partners in the partnership.

Accepted Answer

A) True 
 B)False

Question 18

Owen owns 60 percent of the Big Time partnership.He sells to the partnership a machine for $70,000 that has a $45,000 basis.What would the taxable income be for Owen and what is the partnership's basis in the machine?

Accepted Answer

A) $25,000;$45,000 
B) $0;$45,000 
C) $25,000;$70,000 
D) None of the above is correct 
A) $25,000;$45,000 
B) $0;$45,000 
C) $25,000;$70,000 
D) None of the above is correct

Question 19

Lilac Designs is a partnership with a tax year that ends November 30,2017.During that year,William,a partner,received $4,000 per month as a guaranteed payment and his share of partnership income after guaranteed payments was $20,000.For December of 2017,William received a guaranteed payment of $10,000.Calculate the amount of income from the partnership that William should report for his tax year ended December 31,2017.

Accepted Answer

$68,000 =

Question 20

Jim's basis in his partnership is $200,000.His share of the current year partnership income is $60,000.The partnership paid him a $75,000 distribution in the current year.What is his new basis in the partnership at the end of the year and what is his taxable income from the partnership?

Accepted Answer

A) $200,000;$75,000 
B) $260,000;$60,000 
C) $140,000;$60,000 
D) $185,000;$60,000 
E) $185,000;$135,000 
A) $200,000;$75,000 
B) $260,000;$60,000 
C) $140,000;$60,000 
D) $185,000;$60,000 
E) $185,000;$135,000

Because a partnership does not pay taxes,a partnership is not recognized as a legal entity under civil law.

Which of the following is a not true about an LLC?

Limited liability companies may operate in more than one state.

Which of the following items must be reported separately from ordinary income or loss on a partnership return?

The tax year of a partnership generally closes upon entry of a new 20% partner.

Income from a partnership is taxed to the partner only if the partner receives the income as a distribution during the year.

If Margo and Bruce purchase and operate an ice cream store,for tax purposes they have formed a partnership.

Partnership income is taxed at the same tax rates as the income of corporations.

In general,income is recognized by the partner when a partnership interest is received in exchange for services rendered to the partnership.

Partnership losses that are not used because a partner's basis in the partnership interest is zero may not be carried forward and are lost by the partner.

Guaranteed payments made by a partnership must be made to individuals other than partners in the partnership.

Owen owns 60 percent of the Big Time partnership.He sells to the partnership a machine for $70,000 that has a $45,000 basis.What would the taxable income be for Owen and what is the partnership's basis in the machine?

Jim's basis in his partnership is $200,000.His share of the current year partnership income is $60,000.The partnership paid him a $75,000 distribution in the current year.What is his new basis in the partnership at the end of the year and what is his taxable income from the partnership?

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses Part I

Business Income and Expenses Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding Estimated Payments and Payroll Taxes

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 10: Partnership Taxation

Because a partnership does not pay taxes,a partnership is not recognized as a legal entity under civil law.

Which of the following is a not true about an LLC?

Limited liability companies may operate in more than one state.

Which of the following items must be reported separately from ordinary income or loss on a partnership return?

The tax year of a partnership generally closes upon entry of a new 20% partner.

Income from a partnership is taxed to the partner only if the partner receives the income as a distribution during the year.

If Margo and Bruce purchase and operate an ice cream store,for tax purposes they have formed a partnership.

Partnership income is taxed at the same tax rates as the income of corporations.

In general,income is recognized by the partner when a partnership interest is received in exchange for services rendered to the partnership.

Partnership losses that are not used because a partner's basis in the partnership interest is zero may not be carried forward and are lost by the partner.

Guaranteed payments made by a partnership must be made to individuals other than partners in the partnership.

Owen owns 60 percent of the Big Time partnership.He sells to the partnership a machine for $70,000 that has a $45,000 basis.What would the taxable income be for Owen and what is the partnership's basis in the machine?

Jim's basis in his partnership is $200,000.His share of the current year partnership income is $60,000.The partnership paid him a $75,000 distribution in the current year.What is his new basis in the partnership at the end of the year and what is his taxable income from the partnership?

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses Part I

Business Income and Expenses Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding Estimated Payments and Payroll Taxes

The Corporate Income Tax

Tax Administration and Tax Planning

Filters