Exam 10: Partnership Taxation

Barry owns a 50 percent interest in B&B Interests,a partnership.His brother,Benny,owns a 35 percent interest in that same partnership,and the remaining 15 percent is owned by an unrelated individual.During the current year,Barry sells a rental property with a basis of $60,000 to B&B Interests for $100,000.The partnership intends to hold the rental as inventory for resale.What is the amount and nature of Barry's gain or loss on this transaction?

A partnership reports its income on Form 1040.

Jamie decides to contribute cash and property to a partnership she and her friends started.She contributes a building worth $260,000 that has an adjusted basis of $100,000 and she also contributes $40,000 in cash.What is her basis in the partnership?

On July 1 of the current year,Ambrose was admitted to the partnership of Ambrose and Nectar.His contribution to capital consisted of 500 shares of stock in Paniculata Corporation,which he bought in 2010 for $10,000 and which had a fair market value of $50,000 on July 1 of the current year.Ambrose's interest in the partnership's capital and profits is 25 percent.On July 1 of the current year,the fair market value of the partnership's net assets (after Ambrose was admitted)was $200,000.What is Ambrose's taxable gain in the current year on the exchange of stock for his partnership interest?

Phil and Bill each own a 50 percent interest in P&B Interests.P&B Interests has ordinary income for the year of $35,000 before guaranteed payments to Phil.If Phil receives guaranteed payments of $20,000 during the tax year,what is the total income or loss that should be reported by Bill from the partnership for this tax year?

The "at-risk" rule applies,with limited exceptions,to all taxable activities.

In December of 2017,Miss Havisham and Pip form a wedding planning business.Each of them own 50 percent of the partnership.The partnership establishes a September 30th year-end since most weddings are during the summer.Therefore,the partnership's initial year-end is September 30,2018.For the month of December 2017,the partnership made $3,000 after Miss Havisham's guaranteed payment of $1,000.From January through September of 2018,the partnership made a net income of $65,000 after a $1,500 per month guaranteed payment to Miss Havisham. ​ a.How much income should Miss Havisham report for 2017? b.How much income should Miss Havisham report for 2018?

The partnership of Felix and Oscar had the following items of income during the current tax year: What is the total ordinary income from business activities passed through by the partnership for the current tax year?

During the current year,Jay is a partner in an automobile dealership.Jay's amount at risk at the beginning of the year is $90,000,and during the current year Jay's share of the dealership's ordinary loss is $120,000. a.What is the amount of the loss from the automobile dealership that Jay may deduct in the current year? b.If the dealership has a profit of $63,000 in the subsequent year,how much of the subsequent year income is taxable to Jay?

The partnership of Truman and Hanover realized the following items of income during the current tax year: Both the partners are on a calendar year basis.What is the total income which should be reported as ordinary income from business activities of the partnership for the current tax year?

Oscar and Frank form an equal partnership,the O and F Partnership.Oscar contributes land with an adjusted basis of $45,000,subject to a mortgage of $100,000,in exchange for a partnership interest worth $250,000.Frank contributes cash of $100,000 and performs services for the partnership in exchange for a partnership interest worth $250,000. a.What is the amount of Oscar's recognized gain or loss (if any)as a result of the contribution to the partnership in exchange for the partnership interest? b.What is Oscar's basis in his partnership interest immediately after the contribution? c.What is the amount of Frank's recognized income or loss (if any)as a result of the receipt of the partnership interest in exchange for the cash and services? d.What is the partnership's basis in the land received from Oscar?

Jordan files his income tax return on a calendar-year basis.He is the principal partner of a partnership reporting on a June 30 fiscal year end basis.Jordan's share of the partnership's ordinary income was $24,000 for the fiscal year ended June 30,2017,and $72,000 for the fiscal year ended June 30,2018.How much should Jordan report on his 2017 individual income tax return as his share of taxable income from the partnership?

Lucky's original contribution to the Boxwood Partnership was land with a basis of $5,000 and a market value of $55,000.Her share of the taxable income from the partnership since her original contribution has been $95,000 and Lucky has received $45,000 in cash distributions from the partnership.Lucky did not recognize any gains as a result of the distributions.Calculate Lucky's current basis in her partnership interest.

Cypress Road is a partnership with two partners,Saul,a 60 percent partner,and Robbie,a 40 percent partner.The partnership has income for the year of $100,000 before guaranteed payments to Robbie.Guaranteed payments of $50,000 are paid to Robbie for his management services during the year.Calculate the amount of income that should be reported by Saul and Robbie from the partnership for the year. Saul should report income of $__________. Robbie should report income of $__________.

Ownership of a partnership interest by a taxpayer's brother is considered indirect ownership by the taxpayer.

Losses on transactions between a partnership and its partners are always disallowed.

A partnership may not show a loss as a result of deducting guaranteed payments made to the partners.

Wallace and Pedersen have equal interests in the capital and profits of the partnership of Wallace and Pedersen.They are otherwise unrelated to each other.On August 1,2017,Wallace sold 100 shares of Kalmia Mining Corporation to the partnership for its fair market value of $7,000.Wallace had bought the stock in 2008 at a cost of $10,000.What is Wallace's deductible loss for 2017 as a result of the sale of this stock?

Barbara receives a current distribution consisting of $2,000 cash plus other property with an adjusted basis to the partnership of $2,300 and a fair market value on the date of the distribution of $7,000.Barbara has a 10 percent interest in the partnership and her basis in her partnership interest,immediately prior to the distribution,is $5,000.What is Barbara's basis in the non-cash property received in the current distribution?

A partner contributes assets with a basis of $50,000 and a fair market value of $80,000 to a partnership.What is the basis of the property to the partnership and what is the general rule for the basis of appreciated property contributed to a partnership?