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ACC - MCQs and short problems

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Question;PartnershipsDetermine whether the following statements are True or False:1. Guaranteed payments to partners reduce the ordinary income of the partnership.2. Recourse borrowing of a partnership reduces the basis of each partner in interest in the partnership.3. Tax exempt interest income increases the basis of each partner's interest in the partnership.4. A partner's basis in a partnership equals the adjusted basis of the property contributed, plus the partner's share of all liabilities, minus any liability of the partner assumed by the partnership.5. A partner does not recognize any income when services are exchanged for a partnership interest.6. In computing the ordinary income of a partnerships, charitable contributions are deducted.7. The passive loss rules do not apply to a partner in a partnership.8. A capital loss is not deductible in order to determine the ordinary income of a partnership.9. An ordinary loss if fully deductible by a partner without regard to his partnerships basis.10. The holding period of property acquired by a partnership as a contribution by a partner includes the period during which the property was held by the contributing partner.Liquidations:Determine whether the following statements are True or False:1. A nonliquidating cash distribution may reduce the recipient partner's basis below zero.2. A nonliquidating distribution of unappreciated inventory reduces the recipient partner's basis in his partnership interest.3. Gain is recognized by the partner who receives a non liquidating distribution of property, when the adjusted basis of the property exceeds his basis in the partnership interest before the distribution.4. A nonliquidating distribution of only cash, may result in a deductible loss.5. A liquidating distribution of only cash, may result in a deductible loss.6. In a nonliquidating distribution, if there is sufficient basis to the partner, the property received will have the same basis to the partner as the property had to the partnership.7. In a liquidating distribution of property, where the partner's basis exceeds the property's basis, the property received will have the same basis to the partner as the property had to the partnership.Comparative Entities:Amber has a 20% ownership interest in an entity for which she initially contributed $100,000. is one of the original owners of the business. During the life of the business the following occurred:1. Cumulative losses of $300,000 during the last three years (her share would be $60,000).2. Profits of $200,000 in the current year (her share would be $40,000).3. Distributions to owners of $75,000 (her share would be $15,000) in the current year.Determine the tax consequences if the entity is a partnership:a. How much loss can she deduct over the three years?b. How much income will be taxable to her in the current year?c What is the ending balance of her partnership interest (show computations)?Beginning $100,000____________Ending BalanceDetermine the tax consequences if the entity is a S Corporation:a. How much loss can she deduct over the three years? __________b. How much income will be taxable to her in the current year? _________c. What is the ending balance of her partnership interest (show computations)?Beginning $100,0000___________Ending balanceDetermine the tax consequences if the entity is a regular Corporation:a. How much loss can she deduct over the three years?b How much income will be taxable to her in the current year?c What is the ending balance of her partnership interest (show computations)?Beginning $100,000="apple-interchange-newline">

 

Paper#41859 | Written in 18-Jul-2015

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