Study Unit 14
On May 1 of the current year, Mr. Good contributed 500 shares of stock in Candid Corporation to the partnership of Murphy & Wooster for a 25% interest in the partnership's capital and profits.
A. $0
In return for a 20% partnership interest, Kathy contributed land having a $60,000 fair market value and a $30,000 basis to the partnership.
A. $18,800
A and B formed a partnership by transferring the following assets to the partnership: A transferred $25,000 in cash and equipment.
A. $19,800
The partnership of Truman, Inc., and Bill Hanover realized the following items of income during the current year:
A. $62,000
Dunn and Shaw are partners who share profits and losses equally.
B. $101,000
Jeffrey, the sole proprietor of hardware business, hired Eastwood on January 1, Year 1, for an agreed salary and a promise to give him a 25% ownership if he were still employed at the end of 3 years.
B. $15,000 $15,000
The following information pertains to land contributed by PINK for a 50% interest in a new partnership:
B. $85,000
For federal income tax purposes, a partnership other than a publicly trade partnership is
B. Considered to be a nontaxable entity but must file an information return.
A group of six individuals organizes an LLC to conduct a software publishing business in Florida. No individual is specifically authorized to make the election. What individual(s) is(are) required to make the election?
B. Every member of the entity
The holding period of property acquired by a partnership as a contribution to the contributing partner's capital account
B. Includes the period during which the property was held by the contributing partner.
Which of the following is a true statement with respect to a partnership electing, under Sec. 444
B. The election requires a payment to approximate the tax the partners would have paid if the partnership switched to its required year
On June 1 of the current year, Kelly received a 10% interest in Rock Co., a partnership, for services contributed to the partnership.
C. $10,000 ordinary income
A, B, and C formed a calendar-year partnership. Profits and losses are to be shared equally.
C. $100,000
Ralph Elin contributed land to the partnership of Anduz & Elin. Elin's adjusted basis in this land was $50,000, and its fair market value was $75,000.
C. $50,000
Sam and Terry formed the ST Partnerships as equal partners on July 15 of the current year.
C. $65,000
Eng contributed the following assets to a partnership in exchange for a 50% interest in the partnership's capital and profits:
C. $75,000
Which taxable year may a newly formed partnership not adopt without obtaining prior approval from the IRS?
C. A January 31 year end if it is a retail enterprise with a natural business year ending January 31 and all of its majority and principal partners are on a calendar year.
For federal income tax purposes, all of the following statements regarding partnerships are true except
C. Co-ownership of property that is maintained and leased or rented
Which of the following statements with respect to property contributed to a partnership is false?
C. Exchanges of partnership interests generally qualify for nontaxable treatment as exchanges of like-kind property.
In the computation of the ordinary income of a partnership, a deduction is allowed for
C. Guaranteed payments to partners
With respect to a partner who sells or exchanges his entire interest in a partnership, the closing of the partnership year occurs
C. On the date of the sale or exchange.
Which of the following statements is false with respect to partnership agreements?
C. The partnership agreement can be modified for a particular tax year after the close of the year, but not later than the date for filing the partnership return for that year, including extensions.
Earl acquired a 20% interest in a partnership by contributing property that had an adjusted basis to him of $8,000 and that was subject to a mortgage of $12,000.
D. $1,600 $0
Ben Krug, sole proprietor of Krug Dairy, hired Jan Karl in Year 1 for an agreed salary and the promise of a 10% partnership capital interest if Karl continued in Krug's employ until the end of Year 4.
D. $30,000
Last year, Jim Cash, one of two equal partners, contributed land with a basis to him of $15,000 and a fair market value of $10,000 to the partnership of which he was a member.
D. $6,000 loss.
EJH Partnership was organized in the current year with three partners: E, J, and H.
D. 60 months
Which of the following organizations formed after 1996 cannot be classified as a partnership?
D. All of the answers are correct
When a partner in a six year-partner partnership dies, the partnership tax year must close
D. At the end of the regular partnership year for the surviving partners.
Which of the following is least important when reviewing the partnership agreement for income tax purposes?
D. The Form of the agreement
