10 May HOW MUCH GAIN OR LOSS WILL JOSEPH RECOGNIZE ON THE DISTRIBUTION AND WHAT BASIS WILL HE TAKE IN THE SAFE?
Partnership Distribution: Liquidating and Non-liquidatingQuestion 11. 1. Delilah receives a proportionate nonliquidating distribution from the Carbon Partnership. The distribution consists of $50 000 cash and property with an adjusted basis to the partnership of $150 000 and a fair market value of $180 000. Immediately before the distribution Delilah’s adjusted basis for her partnership interest is $170 000. Delilah’s basis in the noncash property received is:$180 000$150 000$120 000$50 000None of the above.10 pointsQuestion 21. Rosalie is a real estate developer and owns property that is treated as inventory (not a capital asset) in her business. She contributed a parcel of this land (basis $40 000; fair market value $48 000) to a partnership which will also hold it as inventory. After three years the partnership sells the land for $60 000. The partnership will recognize a $20 000 capital gain on sale of the property.TrueFalse10 pointsQuestion 31. 1. Juliet contributed property with a $48 000 basis and fair market value of $100 000 to the JT Partnership in exchange for a 40% interest in partnership capital and profits. During the first year of partnership operations JT had net taxable income of $40 000 and tax-exempt income of $80 000. The partnership distributed $40 000 cash to Juliet. Her share of partnership recourse liabilities on the last day of the partnership year was $30 000. Juliet’s adjusted basis (outside basis) for her partnership interest at year-end is:$64 000$126 000$70 000$86 000None of the aboveQuestion 41. 1. Micah and Ariana formed an equal partnership on June 1 of the current year. Micah contributed $10 000 cash and land with a basis of $6 000 and a fair market value of $15 000. Ariana contributed equipment with a basis of $30 000 and a value of $25 000. Micah’s tax basis in his interest is $16 000; Ariana’s tax basis is also $25 000.TrueFalseQuestion 51. 1. The Copper Partnership distributed $30 000 cash to Esme in a proportionate nonliquidating distribution. Esme’s basis in her partnership interest was $20 000 immediately before the distribution. As a result of the distribution Esme’s basis is reduced to $0 and she recognizes $10 000 of capital gain.TrueFalse10 pointsQuestion 61. 1. Izzy’s partnership interest basis is $60 000. Izzy receives a proportionate liquidating distribution from a liquidating partnership of $45 000 cash and inventory having a basis of $20 000 to the partnership and a fair market value of $6 000. Izzy assigns a basis of $6 000 to the inventory and recognizes a $9 000 loss.TrueFalseQuestion 71. 1. Piper and Adam formed a partnership. Piper received a 50% interest in partnership capital and profits in exchange for contributing land with a basis of $160 000 and a fair market value of $300 000. Adam received a 50% interest in partnership capital and profits in exchange for contributing $300 000 of cash. Three years after the contribution date the land contributed by Piper is sold by the partnership to a third party for $360 000. How much taxable gain will Piper recognize from the sale?$170 000$140 000$200 000$30 000None of the aboveQuestion 81. 1. Molly owns a 30% interest in the capital and profits of the Silver Partnership. Immediately before she receives a proportionate nonliquidating distribution from Silver the basis of her partnership interest is $60 000. The distribution consists of $20 000 in cash and land with a fair market value of $80 000. Silver’s adjusted basis in the land immediately before the distribution is $70 000. As a result of the distribution Molly recognizes a gain of $30 000 and her basis in the land is $70 000.TrueFalseQuestion 91. 1. Sydney is a partner in the Lime Partnership which is not publicly traded. Her allocable share of Lime’s passive ordinary losses from a nonrealty activity for the current year is ($300 000). Sydney has a $125 000 adjusted basis (outside basis) for her interest in Lime (before deduction of any of the passive losses). Her amount “at risk” under §Â 465 is $100 000 (before deduction of any of the passive losses). She also has $60 000 of passive income from other sources. How much of the $300 000 passive loss allocated to her can Sydney deduct on her current year’s tax return?$60 000$100 000$300 000$125 000None of the aboveQuestion 101. 1. Joseph has an outside basis of $80 000 in the Tungsten Partnership as of December 31 of the current year. On that date the partnership liquidates and distributes to Joseph a proportionate distribution of $35 000 cash and inventory with an inside basis to the partnership of $25 000 and a fair market value of $50 000. In addition Joseph receives a safe which has an inside basis and fair market value of $4 500 and $6 000 respectively. None of the distribution is for partnership goodwill. How much gain or loss will Joseph recognize on the distribution and what basis will he take in the safe?$0 loss; $20 000 basis$14 000 loss; $6 000 basis$5 000 loss; $-0- basis$15 500 loss; $4 500 basis None of the above
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