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Question;1136., A;A property distribution from a partnership to a partner is generally taxable to;the partner.;a.;True;b. False;1137., 2;For Federal income tax purposes, a distribution from a partnership to a partner;is treated the same as a distribution from a C corporation to its shareholders.;a.;True;b. False;1138., 3;In a liquidating distribution, a partnership need not distribute all of its;property to all of its partners.;a.;True;b. False;1139., 4;A distribution cannot be ?proportionate? if only one partner receives assets;from the partnership.;a.;True;b. False;1140., 5;For income tax purposes, proportionate and disproportionate distributions from;a partnership are treated similarly.;a.;True;b. False;1141., 6;Generally, gain is recognized on a proportionate current or liquidating;distribution if the fair market value of property distributed exceeds the;partner?s basis in the partnership interest.;a.;True;b. False;1142., 7;In a proportionate nonliquidating distribution of cash and a capital asset, the;partner recognizes gain to the extent the amount of cash distributed exceeds;the partner?s basis in the partnership interest.;a.;True;b. False;1143., 8;In a proportionate nonliquidating distribution, cash is deemed to be;distributed first, followed by unrealized receivables and inventory and, last;capital and other assets.;a.;True;b. False;1144., 9;For purposes of determining gain on a current distribution to a partner, a;distribution of cash includes relief of a partner?s share of partnership;liabilities and certain distributions of marketable securities.;a.;True;b. False;1145.,10;The LMO Partnership distributed $30,000 cash to Emma in a proportionate;nonliquidating distribution. Emma?s basis in her partnership interest was;$25,000 immediately before the distribution. As a result of the distribution;Emma?s basis is reduced to $0 and she recognizes a $5,000 gain.;a.;True;b. False;1146.,11;Jared owns a 40% interest in the capital and profits of the JAJ Partnership.;Immediately before he receives a proportionate nonliquidating distribution from;JAJ, the basis of his partnership interest is $60,000. The distribution consists;of $40,000 in cash and land with a fair market value of $25,000. JAJ?s adjusted;basis in the land immediately before the distribution is $30,000. As a result;of the distribution, Jared recognizes no gain or loss and his basis in the land;is $20,000.;a.;True;b. False;1147.,12;Jeremy receives a proportionate nonliquidating distribution from the JKL;Partnership when the basis of his interest is $100,000. The distribution;consists of cash of $25,000, land with a basis of $30,000 and a fair market;value of $65,000, and inventory with a partnership basis of $50,000 and fair;market value of $60,000. As a result of this distribution, Jeremy recognizes a;$50,000 gain and takes a $65,000 basis in the land and a $60,000 basis in the;inventory.;a.;True;b. False;1148.,13;Shelby, a partner in the STU partnership, received a proportionate;nonliquidating distribution of $50,000 cash, unrealized receivables with a;basis of $0 and a fair market value of $40,000, and land with a basis of;$35,000 and a fair market value of $25,000. Her basis in the partnership;interest immediately before the distributions was $70,000. She will recognize;$0 gain on the distribution, and her basis in the receivables and land will be;$0 and $20,000 respectively.;a.;True;b. False;1149.,14;Matt, a partner in the MB Partnership, receives a proportionate, nonliquidating;distribution of property having a fair market value of $16,000 and a;partnership basis of $23,000. Matt?s basis in the partnership is $10,000 before;the distribution. In this situation, Matt will recognize a $6,000 gain, take a;$16,000 basis in the property, and his basis in the partnership interest is;reduced to zero.;a.;True;b. False;1150.,15;Tim and Darby are equal partners in the TD Partnership. Partnership income for;the year is $60,000. Tim needs cash in order to pay tax on his share of the;partnership income, but Darby wants to leave the cash in the partnership for;expansion. If the partners agree, it is acceptable for TD to distribute $8,000;to Tim, and no cash or other property to Darby.;a.;True;b. False;1151.,16;Marcie is a 40% member of the M&A LLC. Her basis is $40,000 immediately;before the LLC distributes to her $30,000 of cash and land (basis to the LLC of;$20,000 and fair market value of $25,000). As a result of the proportionate;nonliquidating distribution, Marcie recognizes a gain of $15,000 and her basis;in the land equals its fair market value of $25,000.;a.;True;b. False;1152.,17;Pat is a 40% member of the P&J LLC. Her basis is $30,000 immediately before;the LLC distributes to her $40,000 of cash and land (basis to the partnership;of $25,000 and fair market value of $50,000). As a result of the proportionate;nonliquidating distribution, Pat recognizes a gain of $10,000 and her basis in;the land is $0.;a.;True;b. False;1153.,18;In a proportionate liquidating distribution, RST Partnership distributes to;partner Riley cash of $30,000, accounts receivable (basis of $0 and fair market;value of $40,000), and land (basis of $65,000 and fair market value of;$50,000). Riley?s basis was $40,000 before the distribution. On the;liquidation, Riley recognizes a gain of $0, and her basis is $10,000 in the;land and $0 in the accounts receivable.;a.;True;b. False;1154.,19;In a proportionate liquidating distribution, UVW Partnership distributes to;partner William cash of $25,000, accounts receivable (basis of $10,000 and fair;market value of $8,000), and land (basis of $50,000 and fair market value of;$60,000). William?s basis was $75,000 before the distribution. On the;liquidation, William recognizes no gain or loss, and he takes a basis of;$10,000 in the accounts receivable, and $50,000 in the land.;a.;True;b. False;1155.,20;Zach?s partnership interest basis is $80,000. Zach receives a proportionate;liquidating distribution from a liquidating partnership of $60,000 cash and;inventory having a basis of $30,000 to the partnership and a fair market value;of $26,000. Zach assigns a basis of $20,000 to the inventory and recognizes no;gain or loss.;a.;True;b. False;1156.,21;Carlos receives a proportionate liquidating distribution consisting of $8,000;cash and inventory with a basis to the partnership of $5,000 and a fair market;value of $6,000. His basis in his partnership interest was $15,000 immediately;before the distribution. Carlos assigns a basis of $5,000 to the inventory, and;recognizes a $2,000 capital loss.;a.;True;b. False;1157.,22;In a proportionate liquidating distribution in which the partnership is also;liquidated, Macy received cash of $10,000 and inventory (basis of $18,000 and;fair market value of $32,000). Immediately before the distribution, Macy?s;basis in the partnership interest was $40,000. Macy recognizes no gain or loss;and her basis in the inventory is $30,000.;a.;True;b. False;1158.,23;In a proportionate liquidating distribution in which the partnership is also;liquidated, Ralph received cash of $30,000, accounts receivable (basis of $0;and fair market value of $20,000), and a desk (basis of $0 and fair market;value of $1,000). Immediately before the distribution, Ralph?s basis in the;partnership interest was $40,000. Ralph realizes and recognizes a loss of;$10,000, and his basis is $0 in both the accounts receivable and the desk.;a.;True;b. False;1159.,24;Several years ago, the Jaymo Partnership purchased 2,000 shares of ABCO stock;(publicly traded) for $40,000, the stock now has a fair market value of;$90,000. If this stock is distributed to Jason in liquidation of his 30%;partnership interest, it is treated as a cash distribution of $75,000 and a;property distribution of $15,000.;a.;True;b. False;1160.,25;Normally a distribution of property from a partnership does not result in gain;recognition. However, a distribution of marketable securities may be treated;in part, as a distribution of cash that could result in gain recognition.;a.;True;b. False;1161.,26;Mike contributed property to the MDB Partnership in 2008. At the time of the;contribution, the basis in the property was $30,000 and its value was $55,000.;In 2011, MDB distributed that property to partner Dana. Because distributions;from a partnership to a partner are generally nontaxable, neither Mike nor Dana;should recognize any gain on the distribution.;a.;True;b. False;1162.,27;A disproportionate distribution arises when the partnership distributes a share;of partnership hot assets to one or more partners that is not the same as the;partner?s ownership interest in the partnership.;a.;True;b. False;1163.,28;A disproportionate distribution occurs when a cash distribution is not made in proportion to the partners?;ownership interests in the partnership. (Assume the partnership?s only assets;are cash and land held for investment).;a.;True;b. False;1164.,29;A payment to a retiring general partner for his or her share of goodwill of a;partnership in which capital is not a material income-producing factor is;classified as a ? 736(a) income payment and results in ordinary income to the;retiring partner and a current deduction to the partnership, if the goodwill;payment is not provided for in the partnership agreement.;a.;True;b. False;1165.,30;The Crimson Partnership is a service provider. Its assets consist of unrealized;receivables (basis $0, value $200,000), cash of $200,000, and land (basis of;$280,000, value of $400,000). Assume 25% general partner Jill has a basis in;her partnership interest of $130,000. If the ongoing partnership distributes;the $200,000 cash to Jill in liquidation of her interest in the partnership;she will recognize ordinary income of $50,000 and a capital gain of $20,000.;a.;True;b. False;1166.,31;Tyler?s basis in his partnership interest is $110,000, including his share of;partnership debt. Sarah buys Tyler?s partnership interest for $60,000 cash and;she assumes Tyler?s $90,000 share of the partnership?s debt. If the partnership;owns no hot assets, Tyler will recognize a capital loss of $50,000.;a.;True;b. False;1167.,32;Beth sells her 25% partnership interest to Katie for $50,000 cash on July 1 of;the current tax year. Katie also assumed Beth?s share of the partnership?s;liabilities. Beth?s basis in her partnership interest at the beginning of the;year was $40,000, including a $15,000 share of partnership liabilities. The partnership?s;income for the entire year was $100,000, and Beth?s share of partnership debt;was $10,000 as of the date she sold the partnership interest. Assume the;partnership has no hot assets and that its income is earned evenly throughout;the year. Beth recognizes a gain of $12,500 on the sale.;a.;True;b. False;1168.,33;Nick sells his 25% interest in the LMNO Partnership to new partner Katrina for;$57,500. The partnership?s assets consist of cash ($100,000), land (basis of;$90,000, fair market value of $70,000), and inventory (basis of $40,000, fair;market value of $60,000). Nick?s basis in his partnership interest was $57,500.;On the sale, Nick will recognize ordinary income of $5,000 and a capital loss;of $5,000.;a.;True;b. False;1169.,34;A partnership has accounts receivable with a basis of $0 and a fair market;value of $20,000 and depreciation recapture potential of $30,000. All other;assets of the partnership are either cash, capital assets, or ? 1231 assets. If;a purchaser acquires a 40% interest in the partnership from another partner;the selling partner will be required to recognize ordinary income of $20,000.;a.;True;b. False;1170.,35;If a partnership incorporates, it is always deemed to first distribute all of;its assets and liabilities to the partners in complete liquidation. Then the;partners are deemed to contribute those assets to the new corporation (with the;corporation assuming the related liabilities) in a transaction that qualifies;under ? 351.;a.;True;b. False;1171.,36;In the year a donor gives a partnership interest to a donee, their share of the;partnership?s income is prorated between the donor and donee.;a.;True;b. False;1172.,37;A partnership is required to make a downward adjustment to the basis of its;assets if a partnership interest is sold and if the total decline in value of;partnership assets is more than $250,000.;a.;True;b. False;1173.,38;A ? 754 election is made for a tax year in which the partner recognizes gain or;loss on a distribution from the partnership or the basis in distributed;property is increased or decreased from the inside basis the partnership held;in those assets. The election is made by a partner any time it is necessary to;adjust his or her share of the inside basis of partnership assets.;a.;True;b. False;1174.,39;The MBA Partnership makes a ? 736(b) cash payment of $20,000 to partner Amanda;in liquidation of her interest in the partnership. The partnership owns no hot;assets. Amanda?s basis in her partnership interest before the distribution was;$50,000. If the partnership has a ? 754 election in effect, it will record a;$30,000 decrease in its inside basis in partnership assets, affecting all the;remaining partners in the partnership.;a.;True;b. False;1175.,40;Jeremy sold his 40% interest in the HIJ Partnership to Ashley for $400,000. The;inside basis of all partnership assets was $600,000 at the time of the sale. If;the partnership makes a ? 754 election, it will record a $160,000 step-up in;the basis of the partnership assets, and the step-up will be attributed solely;to Ashley.;a.;True;b. False;1176.,41;A partnership continues in existence unless one of the following happens: 1);all assets are distributed to the partners in liquidation of the partnership;or 2) one partner buys the interest of the second partner in a two partner;partnership (resulting in a single owner of the entity).;a.;True;b. False;1177.,42;Kyle gifts a 40% interest in his consulting business to his daughter Amy. For;the current tax year, the KA Partnership reports income of $100,000. Kyle?s;services to the partnership were valued at $40,000. For the current tax year;Amy would report a $24,000 share of the partnership?s income.;a.;True;b. False;1178.,43;Rex and Scott operate a law practice in partnership form. Because Rex and Scott;are brothers, the partnership is subject to the family partnership income;reallocation rules.;a.;True;b. False;1179.,44;A limited liability company generally provides limited liability for those;owners that are not active in the management of the LLC but requires;owner-managers of the LLC to have unlimited personal liability for LLC debts.;a.;True;b. False

 

Paper#59237 | Written in 18-Jul-2015

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