Question 1

The transfer of property to a partnership in exchange for a partnership interest will generally be a nontaxable event.

Accepted Answer

A) True 
 B)False

Question 2

A contribution of services to a partnership will result in recognition of compensation to the contributing partner equal to the fair market value of the services as well as an increase in partnership basis to the extent of the income recognized.

Accepted Answer

A) True 
 B)False

Question 3

Atiqa receives a nonliquidating distribution of land from her partnership. The partnership purchased the land five years ago for $20,000. At the time of the distribution, it is worth $28,000. Prior to the distribution, Atiqa's basis in her partnership interest is $37,000. Atiqa's basis in the distributed land and her post-distribution basis in her partnership interest are:

Accepted Answer

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

Question 4

In the syndication of a partnership, brokerage and registration fees, printing fees, and legal fees of the underwriter total $50,000. With respect to these fees, the partnership must

Accepted Answer

A) capitalize the fees, which are not amortizable. 
B) deduct $5,000 of the expenses in the accounting period incurred and permanently capitalize the remainder. 
C) capitalize and amortize the fees over a period of not less than 60 months. 
D) deduct $5,000 of the expenses in the accounting period incurred and amortize the remaining amount over 180 months. 
A) capitalize the fees, which are not amortizable. 
B) deduct $5,000 of the expenses in the accounting period incurred and permanently capitalize the remainder. 
C) capitalize and amortize the fees over a period of not less than 60 months. 
D) deduct $5,000 of the expenses in the accounting period incurred and amortize the remaining amount over 180 months.

Question 5

Elise contributes property having a $60,000 FMV and a $25,000 adjusted basis and also renders accounting services valued at $30,000 in exchange for an 80% interest in the capital and profits of the EEE partnership. Evan contributes a building with a $90,000 FMV, an adjusted basis of $55,000, and subject to a mortgage of $70,000 for a 20% interest in the capital and profits of the EEE partnership. The partnership assumes the mortgage.
a. What is each partner's respective basis in the partnership?
b. What are the income tax consequences of the contributions?
c. What is the partnership's basis in the assets transferred in by Elise and Evan?

Accepted Answer

@#IMG-DLM& @#IMG-DLM& b. Elise recognizes income o

Question 6

Ben is a 30% partner in a partnership. The partnership guarantees Ben payments of $25,000 for the year. If the partnership has ordinary income of $15,000 before adjustment for the guaranteed payment, Ben must report

Accepted Answer

A) ordinary income of $22,000. 
B) an ordinary loss of $3,000. 
C) ordinary income of $25,000 and a partnership income of $4,500. 
D) ordinary income of $25,000 and a partnership loss of $3,000. 
A) ordinary income of $22,000. 
B) an ordinary loss of $3,000. 
C) ordinary income of $25,000 and a partnership income of $4,500. 
D) ordinary income of $25,000 and a partnership loss of $3,000.

Question 7

The AAA Partnership makes an election to be an Electing Large Partnership. The partnership reports the following activities:
   What are the amounts reported by AAA to the partners on Schedule K-1 for inclusion on their individual tax returns?

Accepted Answer

The net Sec 1231 gain of $75,000 is trea

Question 8

Hal transferred land having a $160,000 FMV and a $75,000 adjusted basis which is subject to a $150,000 mortgage in exchange for a one-third interest in the HEF Partnership. Hal acquired the land ten years ago. The partnership owes no other liabilities. Hal, Ellen, and Felix share profits and losses equally and each has an one-third interest in partnership capital. Hal's basis in the one-third partnership interest is

Accepted Answer

A) $0. 
B) ($25,000). 
C) $75,000. 
D) $85,000. 
A) $0. 
B) ($25,000). 
C) $75,000. 
D) $85,000.

Question 9

Tony is the 100% shareholder of a corporation established five years ago. It has always been an S corporation. After adjustment for this year's corporate income, but before taking distributions into account, Tony has a $50,000 stock basis. The corporation pays Tony a $40,000 cash distribution. As a result of this distribution, Tony will have an ending stock basis and recognize income of

Accepted Answer

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

Question 10

Hildi and Frank have decided to form an interior design partnership. Since Hildi will spend twice as much time as Frank in the business, Hildi would like the partnership agreement to provide for a fixed minimum monthly income. Hildi and Frank expect the partnership to show a loss in the first year of operations. Discuss the issues raised by this arrangement and the likely tax treatment of these issues.

Accepted Answer

The required minimum payments to Hilda a

Question 11

If a partner contributes depreciable property to a partnership in exchange for a partnership interest, the depreciation recapture potential of the contributed assets does not carry over to the partnership.

Accepted Answer

A) True 
 B)False

Question 12

Shelley owns a 25% interest in a qualifying S corporation. Shelley's basis in the stock was $15,000 at the beginning of the year. Shelley made no capital contributions and received no distributions during the year. Shelley loaned the S corporation $20,000 this year. The S corporation incurred a $160,000 ordinary loss this year.
a. What are the amounts of Shelley's deduction and carryover of the unused loss for the year?
b. What is the amount of Shelley's basis in the stock at the end of year one?
c. If the S Corporation earned net income of $200,000 in year two, what is the amount of Shelley's stock basis at the end of year two?

Accepted Answer

The answer of Shelley owns a 25% interest in a...

Question 13

All the following are types of pass-through entities except

Accepted Answer

A) LLP. 
B) LLC. 
C) C corporations. 
D) S corporations. 
A) LLP. 
B) LLC. 
C) C corporations. 
D) S corporations.

The transfer of property to a partnership in exchange for a partnership interest will generally be a nontaxable event.

A contribution of services to a partnership will result in recognition of compensation to the contributing partner equal to the fair market value of the services as well as an increase in partnership basis to the extent of the income recognized.

In the syndication of a partnership, brokerage and registration fees, printing fees, and legal fees of the underwriter total $50,000. With respect to these fees, the partnership must

Ben is a 30% partner in a partnership. The partnership guarantees Ben payments of $25,000 for the year. If the partnership has ordinary income of $15,000 before adjustment for the guaranteed payment, Ben must report

The AAA Partnership makes an election to be an Electing Large Partnership. The partnership reports the following activities: What are the amounts reported by AAA to the partners on Schedule K-1 for inclusion on their individual tax returns?

If a partner contributes depreciable property to a partnership in exchange for a partnership interest, the depreciation recapture potential of the contributed assets does not carry over to the partnership.

All the following are types of pass-through entities except

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

The transfer of property to a partnership in exchange for a partnership interest will generally be a nontaxable event.

A contribution of services to a partnership will result in recognition of compensation to the contributing partner equal to the fair market value of the services as well as an increase in partnership basis to the extent of the income recognized.

In the syndication of a partnership, brokerage and registration fees, printing fees, and legal fees of the underwriter total $50,000. With respect to these fees, the partnership must

Ben is a 30% partner in a partnership. The partnership guarantees Ben payments of $25,000 for the year. If the partnership has ordinary income of $15,000 before adjustment for the guaranteed payment, Ben must report

The AAA Partnership makes an election to be an Electing Large Partnership. The partnership reports the following activities: What are the amounts reported by AAA to the partners on Schedule K-1 for inclusion on their individual tax returns?

If a partner contributes depreciable property to a partnership in exchange for a partnership interest, the depreciation recapture potential of the contributed assets does not carry over to the partnership.

All the following are types of pass-through entities except

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