Description of this paper

1. In a general partnership all the partners are c...

Description

Solution


Question

1. In a general partnership all the partners are classified as ?general partners?, each of whom has unlimited liability for the debts of the partnership. True or False 2. The co-ownership of business property, where minimal services are provided by the owners for their tenants, constitutes a partnership for federal income tax purposes. True or False 3. The tax laws allow partners to include as part of the tax basis in their partnership interests their respective shares of partnership liabilities. True or False 4. When contributed property is sold by the partnership, the recognized gain or loss is allocated among the partners in accordance with the terms in the partnership agreement. True or False 5. As a general rule, when a person obtains an interest in partnership capital through rendition of services, ordinary income is recognized to the extent of the fair market value of the interest received. True or False 6. Neither the partner nor the partnership recognize gain or loss on the contribution of property to the partnership in exchange for an interest in the partnership?s capital and profits. True or False 7. Only a cash basis partnership is concerned with the problem of ?unrealized receivables?. True or False 8. A partner?s interest in a partnership is a capital asset. True or False 9. As a general rule, property distributed to a partner, not in liquidation of an interest in the partnership, takes the same basis in the hands of the partner as it had in the hands of the partnership. True or False 10. To qualify as an S corporation there is no limit to the number of shareholders. True or False 11. If a corporation fails to make a timely S election, an extension of time to make the election may be granted. True or False 12. An S corporation cannot be subject to an income tax. True or False 13. In a general partnership, each partner: a. has unlimited liability for the debts of the partnership. b. must contribute the same amount to the partnership. c. must agree in writing to the terms of the partnership agreement. d. b. and c. 14. Limited partners are partners that: a. have limited liability for the debts of the partnership. b. have some, but limited, participation in the management of the partnership. c. take part in the partnership for a limited amount of time. d. All of the above. 15. A partners tax basis is: a. increased as partnership income and gain is allocated to the partner. b. increased as partnership income and gain is distributed to the partner. c. unaffected as partnership income and gain is allocated to the partner. d. decreased as partnership income and gain is distributed to the partner. 16. Which of the following do not increase a partners basis in the partnership interest? a. additional contributions the partner makes during the year. b. the partners share of tax-exempt income. c. the partners distributive share of partnership items of income and gain. d. All of the above increase a partner?s basis in the partnership interest. 17. Rachael and Ray form an equal partnership R&R on January 1, 20X1. Rachael contributes $100,000 in exchange for her one-half interest; Ray contributes land worth $100,000. Rays adjusted basis in the land is $30,000. Which of the following statements is accurate with respect to this exchange? a. Neither Rachael, Ray, nor R&R recognize any gain or loss on the transfer. b. Ray recognizes $70,000 gain on the transfer. c. R&R recognizes $70,000 gain on the transfer. d. b. and c. 18. Wayne owns 60 percent and Larry owns 40 percent of the profits and losses of the WL partnership. On January 1, 20X4, the basis in their respective partnership interests is $60,000 and $10,000. During 20X4, WL reports taxable ordinary income of $50,000 and has the following separately stated items: qualified dividend income of $1,000; taxable interest income of $2,600; charitable contributions of $3,000; and Sec. 179 expense of $20,000. During the year, partnership liabilities decreased by $25,000 and there were no distributions made to either partner. On December 31, 20X4, which of the following correctly states the basis in each partners interest in WL? a. Wayne: $63,360 and Larry: $12,240 b. Wayne: $65,520 and Larry: $12,680 c. Wayne: $90,360 and Larry: $30,240 d. Wayne: $92,160 and Larry: $31,440 19. On January 1, 2008, Henry, Cabot, and Lodge formed a three-man equal partnership with Henry and Cabot each contributing $100,000 and Lodge contributing securities with a basis to him of $60,000 and a fair market value of $100,000. On September 30 the partnership sold the securities for $130,000. The amount of the gain to be allocated to Lodge is: a. $70,000 b. $50,000 c. $30,000 d. $23,333 20. On April 1, George Hart, Jr. acquired a 25 percent interest in the Wilson, Hart, and Company partnership by gift from his father. The 25 percent partnership interest had been acquired by a $50,000 cash investment by Hart, Sr. 10 years ago. The fair market value of Hart, Sr.?s partnership interest was $60,000 at the time of the gift. Hart, Jr. sold the 25 percent interest for $85,000 on December 17. What type and amount of capital gain should Hart, Jr. report on his tax return? a. Long-term capital gain of $25,000 b. Short-term capital gain of $25,000 c. Long-term capital gain of $35,000 d. Short-term capital gain of $35,000 21. Ralph Elin contributed a plot of land to the partnership of Anduz and Elin. Elin?s adjusted basis for this land was $50,000, and its fair market value was $75,000. Under the partnership agreement, Elin?s capital account was credited with the full fair market value of the land. Anduz matched Elin?s contribution with a $75,000 cash contribution to the partnership. Thus, each partner?s capital account was credited with $75,000. Elin and Anduz share profits and losses equally. What is the adjusted basis of Elin?s interest in the partnership? a. $25,000 b. $37,500 c. $50,000 d. $75,000 22. Wilbur Wallace had an adjusted basis in his partnership interest of $35,000 when the partnership made a distribution to him, not in complete termination of his interest, of $30,000 cash and a parcel of real estate which the partnership held as an investment. The real estate had a basis to the partnership of $10,000 and a fair market value of $15,000. As a result of this distribution: a. Wilbur has ordinary income of $30,000, a capital gain of $15,000, and the real estate has a basis to him of $15,000. b. Wilbur has ordinary income of $5,000, no capital gain and the real estate has a basis to him of $10,000. c. Wilbur has no ordinary income, no capital gain, and the real estate has a basis to him of $5,000. d. Wilbur has no ordinary income, a capital gain of $5,000, and the real estate has a basis of $10,000. 23. Magda Shaw?s adjusted basis for her partnership interest in Shaw & Zack was $60,000. In complete liquidation of her interest in Shaw & Zack, Shaw received cash of $44,000 plus the following assets: Adjusted Basis to Shaw & Zack Fair Market Value to Shaw & Zack Land?Tract A $24,000 $10,000 Land?Tract B 8,000 8,000 How much is Shaw?s basis for Tract B? a. $16,000 b. $8,000 c. $ 7,111 d. $ 4,000 24. John Albin is a retired partner of Brill & Crum, a personal service partnership. Albin has not rendered any services to Brill & Crum since his retirement over 10 years ago. Under the provisions of Albin?s retirement agreement, Brill & Crum is obligated to pay Albin 10 percent of the partnership?s net income each year. In compliance with this agreement, Brill & Crum paid Albin $25,000 this year. How should Albin treat this $25,000? a. Not taxable b. Ordinary income c. Short-term capital gain d. Long-term capital gain 25. Martha is a 30 percent partner in a partnership, and has a basis in her partnership interest of $20,000. Assume that the partnership has a Sec. 754 election in effect, and that Martha receives a cash distribution of $35,000 from the partnership. Which of the following statements is true? a. The partnership will step up the basis of its assets by $15,000. b. The partnership will step down the basis of its assets by $15,000. c. Martha will recognize no income since the Sec. 754 election is in effect. d. The partnership will not adjust the basis of its assets. 26. Ellen is a 25 percent partner in Heartland Partners. Her tax basis in her partnership interest is $18,000. She received a non-liquidating distribution of land with a tax basis of $23,000 and a fair market value of $45,000. The partnership has no liabilities. What will be Ellen?s tax basis in the land received in the non-liquidating distribution? a. $18,000 b. $23,000 c. $45,000 d. zero 27. Who pays tax on the income of an S corporation? a. The S corporation b. The shareholders c. The customers d. There is no tax imposed on S corporation income 28. What is the maximum number of shareholders that an S corporation may have? a. 10 b. 25 c. 35 d. 100 29. Which of the following is not an eligible shareholder for an S corporation? a. Nonresident alien b. Qualified Subchapter S Trust c. An estate d. None of the above 30. Which corporation will qualify for S corporation status? a. Corporation owning a subsidiary b. DISC corporation c. Possession corporation d. None of the above 31. Which of the following taxes is not imposed on an S corporation? a. Built-in gains tax b. Excessive passive investment income tax c. Corporate tax d. Tax on early disposition of property on which the investment credit was claimed by the corporation as a previous C corporation 32. Michael Moore owns stock in an S corporation. The corporation sustained a net operating loss during the year. Michael?s share of the loss is $5,000. His adjusted basis in the stock is $1,000. In addition, he has a loan outstanding to the corporation in the amount of $2,000. What amount, if any, is Michael entitled to deduct with respect to the loss? a. $5,000 b. $3,000 c. $2,000 d. $1,000 33. Passive investment income includes all except: a. Interest b. Sales or exchanges of stock or securities c. Rents d. Interest on deferred payment sales of property held for sale to customers,1. In a general partnership all the partners are classified as ?general partners?, each of whom has unlimited liability for the debts of the partnership. True or False 2. The co-ownership of business property, where minimal services are provided by the owners for their tenants, constitutes a partnership for federal income tax purposes. True or False 3. The tax laws allow partners to include as part of the tax basis in their partnership interests their respective shares of partnership liabilities. True or False 4. When contributed property is sold by the partnership, the recognized gain or loss is allocated among the partners in accordance with the terms in the partnership agreement. True or False 5. As a general rule, when a person obtains an interest in partnership capital through rendition of services, ordinary income is recognized to the extent of the fair market value of the interest received. True or False 6. Neither the partner nor the partnership recognize gain or loss on the contribution of property to the partnership in exchange for an interest in the partnership?s capital and profits. True or False 7. Only a cash basis partnership is concerned with the problem of ?unrealized receivables?. True or False 8. A partner?s interest in a partnership is a capital asset. True or False 9. As a general rule, property distributed to a partner, not in liquidation of an interest in the partnership, takes the same basis in the hands of the partner as it had in the hands of the partnership. True or False 10. To qualify as an S corporation there is no limit to the number of shareholders. True or False 11. If a corporation fails to make a timely S election, an extension of time to make the election may be granted. True or False 12. An S corporation cannot be subject to an income tax. True or False 13. In a general partnership, each partner: a. has unlimited liability for the debts of the partnership. b. must contribute the same amount to the partnership. c. must agree in writing to the terms of the partnership agreement. d. b. and c. 14. Limited partners are partners that: a. have limited liability for the debts of the partnership. b. have some, but limited, participation in the management of the partnership. c. take part in the partnership for a limited amount of time. d. All of the above. 15. A partners tax basis is: a. increased as partnership income and gain is allocated to the partner. b. increased as partnership income and gain is distributed to the partner. c. unaffected as partnership income and gain is allocated to the partner. d. decreased as partnership income and gain is distributed to the partner. 16. Which of the following do not increase a partners basis in the partnership interest? a. additional contributions the partner makes during the year. b. the partners share of tax-exempt income. c. the partners distributive share of partnership items of income and gain. d. All of the above increase a partner?s basis in the partnership interest. 17. Rachael and Ray form an equal partnership R&R on January 1, 20X1. Rachael contributes $100,000 in exchange for her one-half interest; Ray contributes land worth $100,000. Rays adjusted basis in the land is $30,000. Which of the following statements is accurate with respect to this exchange? a. Neither Rachael, Ray, nor R&R recognize any gain or loss on the transfer. b. Ray recognizes $70,000 gain on the transfer. c. R&R recognizes $70,000 gain on the transfer. d. b. and c. 18. Wayne owns 60 percent and Larry owns 40 percent of the profits and losses of the WL partnership. On January 1, 20X4, the basis in their respective partnership interests is $60,000 and $10,000. During 20X4, WL reports taxable ordinary income of $50,000 and has the following separately stated items: qualified dividend income of $1,000; taxable interest income of $2,600; charitable contributions of $3,000; and Sec. 179 expense of $20,000. During the year, partnership liabilities decreased by $25,000 and there were no distributions made to either partner. On December 31, 20X4, which of the following correctly states the basis in each partners interest in WL? a. Wayne: $63,360 and Larry: $12,240 b. Wayne: $65,520 and Larry: $12,680 c. Wayne: $90,360 and Larry: $30,240 d. Wayne: $92,160 and Larry: $31,440 19. On January 1, 2008, Henry, Cabot, and Lodge formed a three-man equal partnership with Henry and Cabot each contributing $100,000 and Lodge contributing securities with a basis to him of $60,000 and a fair market value of $100,000. On September 30 the partnership sold the securities for $130,000. The amount of the gain to be allocated to Lodge is: a. $70,000 b. $50,000 c. $30,000 d. $23,333 20. On April 1, George Hart, Jr. acquired a 25 percent interest in the Wilson, Hart, and Company partnership by gift from his father. The 25 percent partnership interest had been acquired by a $50,000 cash investment by Hart, Sr. 10 years ago. The fair market value of Hart, Sr.?s partnership interest was $60,000 at the time of the gift. Hart, Jr. sold the 25 percent interest for $85,000 on December 17. What type and amount of capital gain should Hart, Jr. report on his tax return? a. Long-term capital gain of $25,000 b. Short-term capital gain of $25,000 c. Long-term capital gain of $35,000 d. Short-term capital gain of $35,000 21. Ralph Elin contributed a plot of land to the partnership of Anduz and Elin. Elin?s adjusted basis for this land was $50,000, and its fair market value was $75,000. Under the partnership agreement, Elin?s capital account was credited with the full fair market value of the land. Anduz matched Elin?s contribution with a $75,000 cash contribution to the partnership. Thus, each partner?s capital account was credited with $75,000. Elin and Anduz share profits and losses equally. What is the adjusted basis of Elin?s interest in the partnership? a. $25,000 b. $37,500 c. $50,000 d. $75,000 22. Wilbur Wallace had an adjusted basis in his partnership interest of $35,000 when the partnership made a distribution to him, not in complete termination of his interest, of $30,000 cash and a parcel of real estate which the partnership held as an investment. The real estate had a basis to the partnership of $10,000 and a fair market value of $15,000. As a result of this distribution: a. Wilbur has ordinary income of $30,000, a capital gain of $15,000, and the real estate has a basis to him of $15,000. b. Wilbur has ordinary income of $5,000, no capital gain and the real estate has a basis to him of $10,000. c. Wilbur has no ordinary income, no capital gain, and the real estate has a basis to him of $5,000. d. Wilbur has no ordinary income, a capital gain of $5,000, and the real estate has a basis of $10,000. 23. Magda Shaw?s adjusted basis for her partnership interest in Shaw & Zack was $60,000. In complete liquidation of her interest in Shaw & Zack, Shaw received cash of $44,000 plus the following assets: Adjusted Basis to Shaw & Zack Fair Market Value to Shaw & Zack Land?Tract A $24,000 $10,000 Land?Tract B 8,000 8,000 How much is Shaw?s basis for Tract B? a. $16,000 b. $8,000 c. $ 7,111 d. $ 4,000 24. John Albin is a retired partner of Brill & Crum, a personal service partnership. Albin has not rendered any services to Brill & Crum since his retirement over 10 years ago. Under the provisions of Albin?s retirement agreement, Brill & Crum is obligated to pay Albin 10 percent of the partnership?s net income each year. In compliance with this agreement, Brill & Crum paid Albin $25,000 this year. How should Albin treat this $25,000? a. Not taxable b. Ordinary income c. Short-term capital gain d. Long-term capital gain 25. Martha is a 30 percent partner in a partnership, and has a basis in her partnership interest of $20,000. Assume that the partnership has a Sec. 754 election in effect, and that Martha receives a cash distribution of $35,000 from the partnership. Which of the following statements is true? a. The partnership will step up the basis of its assets by $15,000. b. The partnership will step down the basis of its assets by $15,000. c. Martha will recognize no income since the Sec. 754 election is in effect. d. The partnership will not adjust the basis of its assets. 26. Ellen is a 25 percent partner in Heartland Partners. Her tax basis in her partnership interest is $18,000. She received a non-liquidating distribution of land with a tax basis of $23,000 and a fair market value of $45,000. The partnership has no liabilities. What will be Ellen?s tax basis in the land received in the non-liquidating distribution? a. $18,000 b. $23,000 c. $45,000 d. zero 27. Who pays tax on the income of an S corporation? a. The S corporation b. The shareholders c. The customers d. There is no tax imposed on S corporation income 28. What is the maximum number of shareholders that an S corporation may have? a. 10 b. 25 c. 35 d. 100 29. Which of the following is not an eligible shareholder for an S corporation? a. Nonresident alien b. Qualified Subchapter S Trust c. An estate d. None of the above 30. Which corporation will qualify for S corporation status? a. Corporation owning a subsidiary b. DISC corporation c. Possession corporation d. None of the above 31. Which of the following taxes is not imposed on an S corporation? a. Built-in gains tax b. Excessive passive investment income tax c. Corporate tax d. Tax on early disposition of property on which the investment credit was claimed by the corporation as a previous C corporation 32. Michael Moore owns stock in an S corporation. The corporation sustained a net operating loss during the year. Michael?s share of the loss is $5,000. His adjusted basis in the stock is $1,000. In addition, he has a loan outstanding to the corporation in the amount of $2,000. What amount, if any, is Michael entitled to deduct with respect to the loss? a. $5,000 b. $3,000 c. $2,000 d. $1,000 33. Passive investment income includes all except: a. Interest b. Sales or exchanges of stock or securities c. Rents d. Interest on deferred payment sales of property held for sale to customers

 

Paper#2149 | Written in 18-Jul-2015

Price : $25
SiteLock