Question 1

A partnership is generally required to use the tax year of one or more partners who own more than a 50% interest in partnership profits and capital.

Accepted Answer

A) True 
 B)False

Question 2

Minna is a 50% owner of a calendar year S corporation. During the current year, the S corporation had ordinary income of $400,000, short-term capital gain of $150,000 and a charitable contribution of $30,000. What does Minna report for the year from the S corporation?

Accepted Answer

Minna has $200,000 ordinary in

Question 3

An accounting partnership can become an electing large partnership as long as it has at least 100 partners and files the appropriate election.

Accepted Answer

A) True 
 B)False

Question 4

S status can be elected if 50% of all shareholders consent to the S corporation election on the date of the S corporation election.

Accepted Answer

A) True 
 B)False

Question 5

Stephanie owns a 25% interest in a qualifying S corporation. Stephanie's basis in the stock was $40,000 at the beginning of the year. Stephanie made no capital contributions and received no distributions during the year. Stephanie loaned the S corporation $10,000 this year. The S corporation incurred a $240,000 ordinary loss this year. Stephanie's deduction and carryover of the unused loss are

Accepted Answer

A) $30,000 and $30,000. 
B) $40,000 and $20,000. 
C) $50,000 and $10,000. 
D) $60,000 and $0. 
A) $30,000 and $30,000. 
B) $40,000 and $20,000. 
C) $50,000 and $10,000. 
D) $60,000 and $0.

Question 6

What is the effect of a change in a partner's interest in the partnership during the year?

Accepted Answer

If there is a change in any partner's in

Question 7

All of the following statements are true regarding nonliquidating distributions of a partnership except:

Accepted Answer

A) If money is distributed in excess of the partnership interest, the partner receiving the distribution has capital gain. 
B) In no circumstances will the partner or the partnership recognize gain or loss from a nonliquidating distribution. 
C) In no circumstances may the partner's basis in the partnership interest be reduced below zero as a result of a nonliquidating distribution. 
D) If, after money distributions reduce the partnership basis, the adjusted basis of distributed property does not exceed the partner's basis in the partnership interest, the basis of the distributed property carries over to the partner. 
A) If money is distributed in excess of the partnership interest, the partner receiving the distribution has capital gain. 
B) In no circumstances will the partner or the partnership recognize gain or loss from a nonliquidating distribution. 
C) In no circumstances may the partner's basis in the partnership interest be reduced below zero as a result of a nonliquidating distribution. 
D) If, after money distributions reduce the partnership basis, the adjusted basis of distributed property does not exceed the partner's basis in the partnership interest, the basis of the distributed property carries over to the partner.

Question 8

A partnership sells equipment and recognizes depreciation recapture under Sec. 1245. In reporting its results for the year, the partnership will separately state the Sec. 1245 depreciation recapture.

Accepted Answer

A) True 
 B)False

Question 9

Gains on sales or exchanges between a partner and the partnership are treated as ordinary income if the partner owns more than a 50% interest in the capital or profits and the asset that is exchanged is not a capital asset in the transferee's hands.

Accepted Answer

A) True 
 B)False

Question 10

Torrie and Laura form a partnership in which they are equal partners. Torrie contributes $100,000 cash. Laura contributes $40,000 cash and a painting worth $60,000. Laura purchased the painting three years ago for $45,000. In two years the partnership sells the painting for $80,000.
a. What is the partnership's basis in the painting?
b. When the painting is sold, how much gain is allocated to each partner?

Accepted Answer

a. The partnership's basis in the painti

Question 11

All of the following could file partnership tax returns except

Accepted Answer

A) general partnership. 
B) limited liability partnership. 
C) limited liability company. 
D) single member limited liability company. 
A) general partnership. 
B) limited liability partnership. 
C) limited liability company. 
D) single member limited liability company.

Question 12

Assuming extensions are not filed, tax returns for calendar year S corporations and partnerships are both due on April 15.

Accepted Answer

A) True 
 B)False

Question 13

Sandy and Larry each have a 50% interest in SL Partnership. The partnership and the individuals file on a calendar year basis. In 2014, SL Partnership had a $30,000 ordinary loss. Sandy's adjusted basis in her partnership interest on January 1, 2014 was $12,000. In 2015, SL Partnership had ordinary income of $20,000. Assuming there were no other adjustments to Sandy's basis in the partnership, what amount of partnership income (loss)would Sandy show on her 2014 and 2015 individual income tax returns?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 14

The basis of a partnership interest is equal to the sum of money contributed plus the FMV of the property transferred to the partnership.

Accepted Answer

A) True 
 B)False

Question 15

Lance transferred land having a $180,000 FMV and a $105,000 adjusted basis, which is subject to a $150,000 mortgage in exchange for a one-third interest in the Trois Partnership. Lance acquired the land in 2002. The partnership owes no other liabilities. Lance, Rhonda, and Zach share profits and losses equally and each has an one-third interest in partnership capital. The tax effect to Lance is

Accepted Answer

A) no gain or loss recognized. 
B) recognized gain of $45,000 on the transfer. 
C) recognized gain of $75,000 on the transfer. 
D) recognized loss of $45,000 on the transfer. 
A) no gain or loss recognized. 
B) recognized gain of $45,000 on the transfer. 
C) recognized gain of $75,000 on the transfer. 
D) recognized loss of $45,000 on the transfer.

Question 16

Discuss how the partnership form of organization or the S corporation form may be used to shift income.

Accepted Answer

If a partnership interest or S corporati

Question 17

Under the "check-the-box" Treasury Regulations, an LLC with more than one member is treated as a partnership unless the LLC affirmatively elects to be classified as a corporation.

Accepted Answer

A) True 
 B)False

Question 18

An S corporation distributes land to its shareholders. The land has a $60,000 basis and a $90,000 FMV. The basis of the land to the shareholders is

Accepted Answer

A) $0. 
B) $30,000. 
C) $60,000. 
D) $90,000. 
A) $0. 
B) $30,000. 
C) $60,000. 
D) $90,000.

Question 19

Payton and Eli form the EP Partnership to provide marketing services. They will be equal partners. Payton is contributing property with a fair market value of $350,000 and a basis of $300,000. Eli is contributing property with a fair market value of $200,000 and a $175,000 basis. He will also provide services to the partnership valued at $150,000. Discuss the issues raised by this arrangement and the likely tax treatment of these issues.

Accepted Answer

The formation of the partnership and tra

Question 20

Which of the following is not a requirement to be an electing large partnership?

Accepted Answer

A) must be a service partnership 
B) must not be engaged in commodity trading 
C) must have at least 100 partners 
D) must file an election 
A) must be a service partnership 
B) must not be engaged in commodity trading 
C) must have at least 100 partners 
D) must file an election

A partnership is generally required to use the tax year of one or more partners who own more than a 50% interest in partnership profits and capital.

Minna is a 50% owner of a calendar year S corporation. During the current year, the S corporation had ordinary income of $400,000, short-term capital gain of $150,000 and a charitable contribution of $30,000. What does Minna report for the year from the S corporation?

An accounting partnership can become an electing large partnership as long as it has at least 100 partners and files the appropriate election.

S status can be elected if 50% of all shareholders consent to the S corporation election on the date of the S corporation election.

What is the effect of a change in a partner's interest in the partnership during the year?

All of the following statements are true regarding nonliquidating distributions of a partnership except:

A partnership sells equipment and recognizes depreciation recapture under Sec. 1245. In reporting its results for the year, the partnership will separately state the Sec. 1245 depreciation recapture.

Gains on sales or exchanges between a partner and the partnership are treated as ordinary income if the partner owns more than a 50% interest in the capital or profits and the asset that is exchanged is not a capital asset in the transferee's hands.

All of the following could file partnership tax returns except

Assuming extensions are not filed, tax returns for calendar year S corporations and partnerships are both due on April 15.

The basis of a partnership interest is equal to the sum of money contributed plus the FMV of the property transferred to the partnership.

Discuss how the partnership form of organization or the S corporation form may be used to shift income.

Under the "check-the-box" Treasury Regulations, an LLC with more than one member is treated as a partnership unless the LLC affirmatively elects to be classified as a corporation.

An S corporation distributes land to its shareholders. The land has a $60,000 basis and a $90,000 FMV. The basis of the land to the shareholders is

Which of the following is not a requirement to be an electing large partnership?

An Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Depreciation, Cost Recovery, Amortization, and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Section 1231 and Recapture

Special Tax Computation Methods, Tax Credits, and Payment of Tax

Tax Research

Corporations

Taxes and Investment Planning

Filters

Exam 17: Partnerships and S Corporations

A partnership is generally required to use the tax year of one or more partners who own more than a 50% interest in partnership profits and capital.

Minna is a 50% owner of a calendar year S corporation. During the current year, the S corporation had ordinary income of $400,000, short-term capital gain of $150,000 and a charitable contribution of $30,000. What does Minna report for the year from the S corporation?

An accounting partnership can become an electing large partnership as long as it has at least 100 partners and files the appropriate election.

S status can be elected if 50% of all shareholders consent to the S corporation election on the date of the S corporation election.

What is the effect of a change in a partner's interest in the partnership during the year?

All of the following statements are true regarding nonliquidating distributions of a partnership except:

A partnership sells equipment and recognizes depreciation recapture under Sec. 1245. In reporting its results for the year, the partnership will separately state the Sec. 1245 depreciation recapture.

Gains on sales or exchanges between a partner and the partnership are treated as ordinary income if the partner owns more than a 50% interest in the capital or profits and the asset that is exchanged is not a capital asset in the transferee's hands.

All of the following could file partnership tax returns except

Assuming extensions are not filed, tax returns for calendar year S corporations and partnerships are both due on April 15.

The basis of a partnership interest is equal to the sum of money contributed plus the FMV of the property transferred to the partnership.

Discuss how the partnership form of organization or the S corporation form may be used to shift income.

Under the "check-the-box" Treasury Regulations, an LLC with more than one member is treated as a partnership unless the LLC affirmatively elects to be classified as a corporation.

An S corporation distributes land to its shareholders. The land has a $60,000 basis and a $90,000 FMV. The basis of the land to the shareholders is

Which of the following is not a requirement to be an electing large partnership?

An Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Depreciation, Cost Recovery, Amortization, and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Section 1231 and Recapture

Special Tax Computation Methods, Tax Credits, and Payment of Tax

Tax Research

Corporations

Taxes and Investment Planning

Filters