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Determine whether the following statements are True or False:

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Determine 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 Balance;Determine 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 balance;Determine 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;Ending balance

 

Paper#79460 | Written in 18-Jul-2015

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