Exam 10: Sole Proprietorships and Flow-Through Entities

_____ 18.The AAA of the S corporation is a corporate level account.

_____ 14.Active participation requires a higher level of activity than material participation.

Simpco Partnership has gross operating revenue of $450,000,cost of sales of $150,000,salaries to employees of $40,000,a $25,000 Section 179 expense deduction,$10,000 of other depreciation,interest income of $2,000,a $4,000 capital loss,and a $500 charitable contribution deduction.What are the partnership's bottom line net income and its separately stated items?

_____ 5.Partners pay taxes on their share of all the partnership net income annually.

_____ 20.There are special rules for an S corporation that must be followed when the corporation decides to liquidate.

_____ 11.The basis limitation rules are applied after the at-risk and passive loss limitation rules.

_____ 10.Recourse debts can only be satisfied with the property used as collateral.

_____ 9.Once established at entry,a partner's basis account does not change.

_____ 2.A limited partnership must have a general partner.

_____ 15.A loss is never recognized on a nonliquidating distribution from a partnership.

_____ 12.All partnerships are passive activities.