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tax problems - questin and answer,.,. ch 21




16. LO.5 When can a partnership use the cash method of accounting?;17. LO.3, 4, 5, 6, 7, 8 Skylark, lnc., a calendar year construction company, and Teal, Inc., a development corporation with a March 31 year-end, form the equal ST LLC on January 1 of the current year. Both members are C corporations. The LLC is formed to construct and lease shopping centers. Skylark contributes equipment (basis and fair market value of $800,000) and cash of $1.2 million. Teal contributes land (basis of $300,000, fair market value of $600,000) and cash of $1.4 million. The cash is used as follows;? Legal fees for drafting LLC?s operating agreement $ 10,000;? Office expense (utilities, rent, overhead, etc.) 90,000;? Materials and labor for construction of shopping center 2,500,000;What issues must ST LLC address in preparing its initial tax return?;18. LO.7 Penguin, LLP, owns a rental property and operates a consulting business. Each partner is active in the business and receives compensation from the LLP. The LLP invests its excess cash in government and corporate bonds, blue chip stocks, and a global mutual fund. It owns property that is subject to accelerated depreciation. What types of information must Penguin accumulate on its Schedule K?;19. LO.8 What is the purpose of the three rules that implement the economic effect test?;20. LO.9, 10 Discuss the adjustments that must be made to a partner?s basis in the partnership interest. When are such adjustments made?;21. LO.10 Describe, in general terms, how a partnership?s liabilities affect a partner?s basis in the partnership interest.;22. LO.11 What is a partner?s capital account? Describe how a partner?s ending capital account balance is determined. In addition to the material in the chapter, refer to;Schedule K?1 in Appendix B.;23. LO.13 What is a guaranteed payment? How is it reported on Form 1065 and its various schedules? How is it reported to and by the partner?;24. LO.13 When is partnership income subject to self-employment tax for an individual partner?;25. LO.10, 12, 17 Discuss situations in which the partnership entity form might be more advantageous (or disadvantageous) than operating as a Subchapter C or S corporation.;26. LO.14 ABC Partnership distributed cash and appreciated land to partner Bell in a proportionate nonliquidating distribution. What is the effect to Bell and ABC?;27. LO.14 In a proportionate liquidating distribution in which the partnership also liquidates;ABC LLP distributes cash, inventory, and unrealized receivables. How does partner Angie determine her basis in the property she received? Might she recognize a gain or loss? Explain.;28. LO.14 What is the effect on a partnership of a proportionate liquidating distribution of cash, appreciated land, and inventory where the partnership also liquidates? How does this compare to a liquidating distribution from a corporation?;29. LO.15 Jody sells her partnership interest to Bill for $10,000. What issues must be addressed by Jody, Bill, and the partnership?


Paper#19676 | Written in 18-Jul-2015

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