FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 14: Partnerships and Limited Liability Entities

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following is a correct definition of a concept related to partnership taxation?

A) The aggregate concept treats partners and partnerships as separate units and gives the partnership its own tax "personality."
B) A partner's capital sharing ratio is defined as the percent of partnership assets (capital) that would be allocated to the partner upon liquidation of the partnership.
C) The partnership's outside basis is defined as the sum of each partner's capital account balance.
D) A special allocation is defined as an amount that could differently affect the tax liabilities of two or more partners.
E) None of these statements is correct.

F) None of the above
G) A) and E)

Correct Answer

verified

Show Answer

Question 42

True/False

Review LaterAdd Note

Review Later

A partnership must provide any information to the partners that the partners would need to calculate deductions not permitted at the partnership level,such as for oil and gas depletion or the corporate dividends received deduction.

A) True
B) False

Correct Answer

verified

Show Answer

Question 43

True/False

Review LaterAdd Note

The "inside basis" is defined as a partner's basis in the partnership interest.

ABC LLC reported the following items on the LLC's Schedule K: ordinary income,$100,000;interest income,$3,000;long-term capital loss, ($4,000) ;charitable contributions,$1,000;post-1986 depreciation adjustment,$10,000;and cash distributions to partners,$50,000.How much will ABC show as net income (loss) on its Analysis of Income (Loss) ?

Morgan and Kristen formed an equal partnership on August 1 of the current year.Morgan contributed $60,000 cash and land with a basis of $18,000 and a fair market value of $40,000.Kristen contributed equipment with a basis of $42,000 and a value of $100,000.Kristen and Morgan each have a basis of $100,000 in their partnership interests.

Kristie is a 30% partner in the KKM Partnership.During the current year,KKM reported gross receipts of $280,000 and a charitable contribution of $30,000.The partnership paid office expenses of $80,000.In addition,KKM distributed $20,000 each to partners Kaylyn and Megan,and the partnership paid partner Kaylyn $20,000 for administrative services.Kristie reports the following income from KKM during the current tax year:

Syndication costs arise when partnership interests are being marketed to investors.These costs cannot be amortized or deducted.

In a limited liability company,all members are protected from all debts of the partnership unless they personally guaranteed the debt.

The partnership reports each partner's share of income to the partner on a Form 1099-MISC.

The sum of the partners' ending basis amounts on all Schedules K-1 equals the partners' ending capital account balance shown on the partnership's Schedule L.

At the beginning of the tax year,Zach's basis for his partnership interest and his amount at risk in the partnership was $30,000.His share of partnership items for the year consisted of tax-exempt interest income of $2,000 and an ordinary loss of $44,000.He also received a distribution from the partnership of $20,000 cash during the year.For the tax year,Zach will report:

A limited partnership (LP)offers all partners protection from claims by the LP's creditors.

Ken and Lars formed the equal KL Partnership during the current year,with Ken contributing $100,000 in cash and Lars contributing land (basis of $60,000,fair market value of $40,000)and equipment (basis of $0,fair market value of $60,000).Lars recognizes a $40,000 gain on the contribution and his basis in his partnership interest is $100,000.

Ashley purchased her partnership interest from Lindsey on the first day of the current year for $40,000 cash.She received a $10,000 cash distribution from the partnership during the year,and her share of partnership income is $15,000.Her share of partnership liabilities on the last day of the partnership year is $20,000.Ashley's outside basis for her partnership interest at the end of the year is $45,000.