CPA Reg R5 Flow through

Question 1

M1: what are the fundamental rules of filing to become an SCorp

Answer 1

If you file form 2553 before the 15th day of the third month (march 15th) of the current tax year then the S Corp election is effective the first day Jan 1) of the current tax year.
If you filed after 3/15, you have 75day ( 3 months and 15 days or oct 15 and its effective for full business year.
If you file after September of current year, than Scorp is effective the following year.
Scorp can have no more than 100 shareholders. Family members count as one share. Family includes: descendants of common ancestors ( father, wife, son daughters, grandchildren) former spouses and estates.
SCorp must screen all potenetial shareholders to make sure they are eligible. Ineligible includes: nonresident aliens( for example, if u s citizen but living in canada they are not eligible), partnerships, corporations, and certain types of trusts (Grantor trust, sections 678 trusts, qualified subchapter s trusts (QSSTs), certain testamentary trusts, and voting trust).
SCopr may not have more the one class of stock: Common. Can Have difference in voting rights among shres of stock are permissible.
No Preferred stock;

Question 2

when both shareholders have 500 shares of stock each in the Scorp how are following distrbuted: how is it distributed and does it increase of decrease basis

Loan to company  750000
share of ordinary business income 136,000
share of tax-exempt income  8000
Share of dividend income 6500
Distributions  29000, 29000
share of expense  900
Shares of charitable contribution 5000

Answer 2

Basis Sarah 100,000 Ida 250,000

Loan to company: no increae/decrease basis. partnership yes
share of ordinary business income : increase basis and split 50/50: 68000 s 68000 i
share of tax-exempt income: increas basis and split 50/50 4000 s 4000 i
share of expense; decrease basis and split 50/50 (-450) s (-450) i
Charitable contri: decrease basis and split 50/50 ( -2750) s (-2750) i
Share of dividend income: increase basis and split 50/50 3250 s 3250 i
cash Distributions: reduce basis (29000 )s ( 29000) i

What is y-e basis
Sarah add and subtract all transaction 143,050
Ida 293,050

Question 3

Can a loss from capital be include in the adjusted basis of an shareholder in a Scorp

Answer 3

No.

Question 4

what are separately stated items that flow onto sch k1 frrom SCorp

Answer 4

Ordinary Income (not subject to FICA) which include recapture of income and unearned rvenue not related to rental activities and mark-to-market income.
Rental income/loss
Portfolio income ( interest rev, div, royalties, and all capital gains/losses)
Tax exempt interest
Percentage depletion
Foriegn income tax
Section 1231 g/l
Charitable contribution
Expense deduction for recovery property (section 179)
unrecapture section 1250 income
g/l on sales of collectables.

Question 5

what is a built in gain: C Corp elected to become an Scorp on beginnin of tax year. has asset with basis of $40K and FMV of $85 elected date of SCOrp 1/1 yr 1. Sold assest when on 9/1/yr 1 when FMv was $95K was is built in gain tax

Answer 5

New Scorp meets built in gan tax: FMV was higher than basis at election dates. C corp elected to become Scorp.
Gain= 85 FMv use at date of election - 40 basis = 45 (amount subject ot built in gain)*35% tax = 15.750 tax liab.

Question 6

For S corp is interest exp separtely stated

Answer 6

No. part of ops.

Question 7

for shareholders in SCorp how much losses can shareholder dedcut on tax retrun

Answer 7

up to amount in basis.

Question 8

Can sole propiretor who elected Scorp get built in gain

Answer 8

no.

Question 9

Which one increase the accum adjment account: capital contribution by shareholders or interest and div income

Answer 9

interest and div income. these separately and nonseparately stated income that incre RE. FYI do not include tax-exempt int income and life insurance proceeds.

Question 10

When can an S corp that terminated re-elect

Answer 10

the fifth year of the current year.

Question 11

Is enterainment exp tax deductible

Answer 11

No. Just Travel and Meals @ 50%.

Question 12

Is the built in gain tax at the highest or lowest corp rate

Answer 12

taxed at 21% at the highest income tax rate.

Question 13

An SCorp shareholder/employee owns 10%. the Scorp pay his health premuin of $7200. what is the amount of insurance premium that shareholder/employee must incluude in gross income

Answer 13

All $7200. was not a 2% or lower sharehold. and was an employee. When I see shareholder with 20share of 2000 shares = 1% this shareholder would have no impact on gross income for insurance prem paid by corp.

Question 14

what is tax basis calc for SCorp

Answer 14

+ initial basis
+share of net income
+ share of separately stated income ( wheather taxable or tax exempt)
- distribution (dividend and withdrawl from basis)
- share of losses/expense
(No mortgage/liab assumed)

Question 15

If Scorp shareholder made a loan to Scorp of 13. Scorp paid 3 of the loan. sharehld basis 25 . Share year loss 40 what amt of loss can shareholer deduct

Answer 15

can deduct loan to corp and loss up t o basis
laon 13-3 = 10. loss 25
25+10= 35

Question 16

In regards to written consent to be elected a s corp,must all shareholders give written consent

Answer 16

Yes.

Question 17

The process for built in gains is a corp level tax on Scorp that disclose of an asset

Answer 17

That appreciate while company was a C Corp.

Question 18

Can a Scorp have shares in a C Corp

Answer 18

Yes.

Question 19

What makes up non-separetly stated when there is separetly stated items.
Net income 72
Section 179  15
charitable      11
CEO gross income 84

Answer 19

Net income 72
Section 179 15 sep stated exp add back
charitable 11 sep stated exp add back
Non sep stated income 98

Question 20

can loss be part of taxable income when basis is higer than loss

Answer 20

no

Question 21

A SCorp sharehold terminatd on 4/1/yr 1. during a 365 year. Scorp had income of $310,250. if no election made what amt of income was alloc in shrt Scorp year

Answer 21

Only time a Scorp

Incoem 310,250/365 days*90 days terminate = 76,500

Question 22

An Copr that elect S corp status terminated give a reason why

Answer 22

if CCorp had invest income the exceeded 90% of gross receipts 3 consecutive yeras it will terminate.

Question 23

There are 30K voting stockholders and 20K nonvoting stockholder. s selction was revoked voluntary. how many stockholder needed to consent

Answer 23

combine of more the 50% of both.

Question 24

M2: What are the impact of partnership interest when exchange for services

Answer 24

When services are exchange for interest in partnership they are exchange at FMV. The parnter will have taxable income and then used as part of partner interst. the exchange will be expense deduction to partnership

Question 25

A partnership by J and R are share liab equally. they have an increas liab of 15 Is the increase liab and increase or decrease to basis

Answer 25

Increase to basis

Question 26

If partnership paydown liab. what impact on partners

Answer 26

decrease basis.

Question 27

M3- What are the requirements for partnership election for things such as 179 depreciation deductions. for the k1

Answer 27

Partnership election include: organizaton startup cost and expenditures: or 709b election ; form 1065 line20: Up to $5000 and remaining amortize 15years or 180 months ( be award if start up date is 7/1 can only amortized 6 months in that year) can be deducted (phase out at partnership first $50K accounting method ( cash or accrual): can use either but if they change method must file form 3115 tax year ( fiscal, if not calander): if both partner are calander taxpayers, the partnership is required to use that. Can make an election of 444 t change y-e no later than 3 months prior to calendar year-end Sept 30 Oct 31 or Nov 30. Depreciation method( MACRS, straight-line, etc DDB 179 deduction) bonus year form 4562, : same depreciation method must be used for asset in the same asset class. Election out of installment sale treatment; 1065 line 12 on Sch b Section 754 election for optional basis adjustments of partnership assets the write up or write down of partner leavaing partnership/ so new partner basis increase

Question 28

``` Which list of revenue and expense are oridinary income, separately stated or both and what is total ordinary income (loss) and Partner A % of ordinary income > 2 partners A @ 40% and B @60% Sales $100,000 COGS (12000) MACRS (4000) Wage Exp (25000) Guarantee Paymnt (6000) Rent Exp (8000) ``` ``` Charity contr (2000) Section 179 deduct (10000) S-T capital gain 5000 Div income 4000 Section 1231 gain 3000 ```

Answer 28

``` Sales $100,000 ordinary COGS (12000) ordinary MACRS (4000) ordinary Wage Exp (25000)ordinary Guarantee Paymnt (6000) both Rent Exp (8000) ordinary Net ordinary income Loss 45,000 Partner A % @ 40% 18000 ``` ``` Charity contr (2000) Separate Section 179 deduct (10000)Separate S-T capital gain 5000Separate Div income 4000Separate Section 1231 gain 3000Separate ```

Question 29

Are accounting to fees to prepare organization material for new corp start up costs.

Answer 29

No

Question 30

M4-What is the taxation for Corp and Partnersip during discontinuance

Answer 30

Corp Double taxed (1) Corp and (2) Shareholders Partnership. No Tax. Corp: Liquidate and shareholder has 20% ownership received land with FMV of $100K and basis of $65K. Shareholder basis is $50K. Corp FMV 100- 65 = $35K taxed Shareholder 100 - basis 50 = 50 tax. Partnership no tax zero out transaction. Liquidate and partner has 20% ownership received land with FMV of $100K and basis of $65K. Shareholder basis is $50K. No gain partner no gain partnership. It is deferred until partner sales.

Question 31

M3 Partner with a $9K basis received $5K in cash and Land with a adj basis of $7K and a FMV of $10 what is his new basis.

Answer 31

Partner reduce the basis $9K by the cash $5K = $4K thenuse the lesser of $7K land basis and new basis $4K = new basis $4K.

Question 32

A partner has a $50K basis. He receives a cash distribution of $20K and land with a adj basis of $40K and FMV of $35K. What is his taxable gain

Answer 32

With a $20K cash distribution from $50 basis = $30K . Land basis is $40K. New basis can't be below $30K. taxable gain = 0

Question 33

Which of the following does the partner make on elections rather than partnership: 179 election, deduction for foreign tax credit for tax payment,

Answer 33

foreign tax credit paid

Question 34

Would interest free loans be part of income taxable to partner

Answer 34

No.

Question 35

Are at-risk and passive losses a determination in partners deductions for losses

Answer 35

Yes.

Question 36

A partnership distributed land to a partner . land had a $20 basis to partnership and the partner had a $10K basis. what are the consequenses to partner

Answer 36

No gain due to nonliquidation, basis will be reduce to 0 due to no cash involved and partner basis will be land basis $10 and not $20K.

Question 37

What is a advantage of a LLC that is a partnership.

Answer 37

It is not double tax.

Question 38

What is an advantage of a partnership and not a SCORP

Answer 38

appreciation of property is distributed tax free is a non liquidating process. SCorp recognized gains are taxed.

Question 39

Are SCorp and Partnership double taxed

Answer 39

No. Only ccorp.

Question 40

A partner has a basis of $4K and 50% interest no property was distributed. non liquidating cash $11K was distribute. Partnership reported income of $10K. Does partner have capital gain.

Answer 40

Yes. To the extent of basis $4K + income share $5K = $9K - cash distrib $11K = $2K

Question 41

When finding basis after distribution is cash used first in calculation

Answer 41

Yes.

Question 42

If two individuals form a corp and then one leave. What is the status of entity

Answer 42

It is still classified as a corp.

Question 43

M2: A has 50% interest, B has 10% interest, C has 20% interest, and d has 20% percent interest. C and D separtated from A and B what is the status of the partnership

Answer 43

It stays partnership due to A & B has more the 50% old partnership. C and D can still start a new partnership

Question 44

Can a partnership use another tax year other than calendar year.

Answer 44

Yes. The deferral period must not exceed three months or 90 days.

Question 45

In a partnership, the holding period for a contributed capital asset begins when

Answer 45

the partner assets transferred on the date the assets began with the partnership.

Question 46

On 1/1/yr 1, 4 partners each had 25% interest in partnership. there was a $300K liab on mortgage to parntership. on 1/2/y1 they abmitted new partner all now have 20% in partnership. On 4/4/yr1 they paid $100K on mortage What is one partners tax basis increase of decrease

Answer 46

4 partners: $300K *25% = 75 incres 5 partners: $300 * 20 = 60 with new partner Diff is reduction 15 decrease basis Add repay @ 5 partners: 100* 20% = 20 decrease basis 35 decrease basis

Question 47

For IRs purposes, a partnership is discontinued

Answer 47

when partnership's business and financial operations are discontined. Not due to over 55% of partership capital is sold.

Question 48

M4: What are 754 election and Section 749 (b) basis adustments

Answer 48

754 elections when new partner is basis old partners assets. the goal is to new parter purchase price = old partners basis. This is done with a 743 (b) basis adjusment. normally there is a buildt in loss of $250K or more. For example: Oscar buys Bernice 25% interest in the partnership for $500K. At time of sale partnership makes a 754 election to adjust basis of assets. inside basis is $1.2M; fmv $2M. Partner will do a 743 adjusment. old partner Bernice got: $500k cash gave up $1.2M*25% ( 300K) 743 adj basis = $200K

Question 49

How do I calculate a partner leaving partnership: Complete withdrawal the 1 of 3 ways a partnership is liquidated

Answer 49

1. Complete withdrawal: nontaxable. Rule is: zero out to get out. Exception when cash is transaction: Cash> than basis = Recognize gain Cash< than basis- Recognize loss Example: Kim interest in KJT partnership is $24K. she retires and receives a liquidation of $5K cash and real estate of $20K. the real estate basis to the partnership is $10K. what is Kim basis in real estate. Cash first. 24 basis - 5 cash = 19. must zero out to get out so real estate basis is $19K . What if no assets involed an Kim received cash of $25K @25K cash - 24 basis = $1K gain. What if Kim received cash of $20K 20-24 = $4K loss

Question 50

Does the partnership itself get a Gain/Loss in liqudation

Answer 50

No

Question 51

How do I calculate sale of partnersip interest the 2 of 3 ways a partnership is liquidated

Answer 51

General rule the partner leaving will have a G/L when transferring interest because it is a partnership capital asset. Example:Kristi sell her interest in the partnership for $15k cash and partnership assume her share of liab of $5K; Kristi realize gain = 15+5 =20. Then to get recogized gain = realize 20- partner interest 20 = 0

Question 52

What are hot asset

Answer 52

Hot assets are partner's share of unrealized ( cash basis ) receivables, appreciated inventory ( if exchange for cash) and recaptured income (regarding depreciable assets owned by partnership)

Question 53

How do I calculate Retirement of death partner interest the 3 of 3 ways a partnership is liquidated

Answer 53

Cash payment of partner's interest results in capital gain or loss. If partner retires or dies during a part of half tax period in years, the selling partner's share of income or loss mest be allocated on a pro rated basis. Example: Bill sell his 20% partner interest in the partnership to a Jim the new partner on 3/31/03. At the end of theyear, the partnership reported income of $80K. What is the G/ l to bill $80K*1/4 = 20 total of 20% interest share for the year. Now get Bill share 20*20% = 4 is Bill portion.

Question 54

How are LLC handle if the elect Corp, Scorp, are partnership

Answer 54

It is based on thier election.

Question 55

If a partnership does not make the 754 election how do you handle

Answer 55

Just take gain from property sold and give new partner is % gain of asset sale. Mike (new partner) purchase 20% in new partnership from out going partner for $250K. 1250 fmv*20=250 Should want higher basis Partnership owns the following assest: Asset Adj tax basis FMV bldg 450 650 Land a 250 300 land b 150 200 Equipment 150 100 total 1,000 1,250 ``` Partnership does not have 754 election Sales land b for $200 What are basis adjustment: bldg 0 no sale Land a 0 no sale land b 0 no sale Equipment 0 no sale Partnership gain on land 50 ( 200-150) New partner gain 50*20% = 10 ```

Question 56

If a partnership does make the 754 election how do you handle

Answer 56

Mike (new partner) purchase 20% in new partnership from out going partner for $250K. 1250 fmv*20=250 Should want higher basis Partnership owns the following assest: Sales land b for $200 Asset Adj tax basis FMV PB bldg 450 650 = 200 * 20% = 40 Land a 250 300 = 50*20% = 10 land b 150 200 = 50*20% = 10 Equipment 150 100 = (50)*20% = (10) total 1,000 1,250 50 Partnership gain on land: 150 basis + 10 from new partner = 160 - 200 fmf build a = 40 gain New partner gain = 0 (new partner has increase basis of $10. New partners get gain.) Partnership does have 754 election Sales land b for $200

Question 57

A partner retires from a partnership with a captial account of $50K and $30k share of liabs. the partnershp pays the partner $5K per month for 18 months beg. 7/1/y8 and agree to releive his share of Liab. what is partner recognition of gain

Answer 57

recognition of gain is based on cash n partners retirement. | Since partner can't recognize gain i this problem until payment fully received, he will recognize $40K in year 9

Question 58

In liquidatio partner received cash $4k his basis was $5K. He received "hot asset" basis of $4K and FMV $5. what income on transaction

Answer 58

capital loss $1K due to basis 5- cash 4 - (1) c | hot asset gain ordinary income 1 = 4 basis - 5fmv = 1

Question 59

a partner basis of property in liquidation is

Answer 59

ajdusted basis of partner's interest and by any cash distibution to reduced to partner

Question 60

In liquidaton tax basis is on what

Answer 60

cash

Question 61

If partner had a realize gain of $174 sold is interest what is his ordinary income received with capital account of $14 and liab of $20. Hot Assets $420 his share is $140

Answer 61

His ordinary income would be based on hot asset and not realize for capital income+ 174-14-20=140

Question 62

M5- what are multi-juristictional tax issue

Answer 62

US taxed corps on its worldwide income when domincile in the US: Export corp are taxed Royalty income for licenses from foreign country but corp in US Forieng business in another country but is a US corp Foriegn tax credit is limited to the lesser of creditable foreign taxes paid ( or accrued) or foreign tax credit limitation. separate foreign entity: these are country that are incorp in foreign country but parent co. in the US income is not tax until repatriated to US also called anti-deferral rules under Subpart F of IRS code. Certain types of passive income of taxed Transfer pricing between two entities to prevent shifting of profits using artificial sales prices or share costs with an affiliate that either is not subject to UStax or does not file consolidated income tax return with US tax payer

Question 63

Can foreign tax be claimed by a corp as credit or deduction

Answer 63

Yes

Question 64

Give an definition of IRS detmination of transfer pricing

Answer 64

Transfer pricing between two entities to prevent shifting of profits using artificial sales prices or share costs with an affiliate that either is not subject to US tax or does not file consolidated income tax return with US tax payer

Question 65

A US corp had the following transaction: ship supplies to company in MI @ $250. sells supplies to Montreal, Canada co for $300. and Canada co pay US corp consulting servicess (title passsing through MI) for $35K. what is US and foreign income

Answer 65

Must spearate | US $250 and Canada 300 and 35 consulting services (due to title passed through MI) 335

Question 66

Will a common carrier delivery trigger nexus ( series of conections and links)

Answer 66

No. common carrier is just a normal busy that could bbe done domestic or interationa

Question 67

How do you do apporationment factor

Answer 67

State Payroll property avg property sales MA 200 175 195 750 total 550 400 395 1650 Just state data in numberator and total deminator sum up all totals/columns use 200/550 = 36.36 + 195/395 = 49.37 use avg not prop) 750/1950 = 45.45 36.36+49.37+45.45/3= 43.73%

Question 68

What are Controlled foreign corp (cfc) Subpart f income and GILTI?

Answer 68

CGC: a company owning 15% with more than 50% are US Shareholders A US person owning 10% of foreign company Definition of US person: US citizen: residnet, domestic partnership, estate or trust for expem blue Bean Inc 15%, George 9% (not a factor), XYZ corp 5% (not a factorr), Bill 11%, Dwght Ince 50%, jefferey 10%. US person: bill, and jeffery. Company: Blue Beam and Dwight Inc.e Corp is a CFC subject to Subpart f foreign business income include: passie income such as interest, dividends, rents, royalties, and annuities also include active income if dwight selling to corp at discount price and corp selling to customers. suject to transfer price and taxed higher: foreign base taxable income: then tax to bill , blue beam , Dwight ince. jefferey. Subject to GiLti: global intangible Low income tax Net inocme excluding subaprt f income less net tanngible income retutrn. Only 2 that are copr gat a 50% deduction.

Question 69

How do you determine the Base erosion and Anti-abuse tax (BEAT TAX)

Answer 69

Required for large corporations ( not scorps) with gross income of $500M annual avg over the last three years and 3% of your deductions were based erosions. Example Cin Corp 2019 annuaal gross income $430M 2019 $430M 2018 $450M 2017 $600M 2016 $525M in 2019 Cin Corp taxable income was $36M and its decuctibles were $200M What is the beat and erosion for each scenario n2019. W1st get avg for 1st three years: 450+600+525 = 1,575/3 525 avg and greater the $500M Step 2 get deductible test 525 avg *3% = 6M must have in applicable deductions Scenario 1: Cin makes deductible payments of $4M to a related domestic affiliate. Is it tax applicable no. did not meet $6M deduct 2. Cin corp made deduct payment of $5.250M to foreign affiliate. did not meet deductible test 3. Cin three avg gross income was $433M and made $8M deduct payments to foreign affiliate. does not meet gross incme 4. Cin makes deduct payments to related foreign affiliate of $8.5m. Applicable. to get amount: Use 2019 taxable income $36M+8.5M deduct add back = $44.5M* 10% tax rate = 4.45 tax compared to 36*21% corp tax = 7.56. Use the greater $7.56 no Beat tax it was more not less 5. Cin makes an elect to be taxed as S Corp. Not applic an Scorp. 6. Cin make deduct payment to relate foreign affiliate total $40M. Applica. 36 tax able +40m deduct = 76 *10% = 7.6 ( foreign tax) to 36*21% 7.56 use the greater = 7.56 beat tax larger by .40

Question 70

Corp increase of foreign driven intangible income

Answer 70

when a foreign corp in the US has revenue in other countries

Question 71

``` which is a category for income for foreign tax credit limitation and which is not: foeign driven intangible incme passive income general category foreign branch ```

Answer 71

Not: foeign driven intangible incme Is: passive income general category foreign branch

Question 72

A sharehold of a CFC is considered US shareholder

Answer 72

when shareholder is a US person with at least 10% of stock value or voting stock

Question 73

Are dividends paid to foreign corp to a 10% or more US corp shareholder eligible for 100% DRD

Answer 73

yes.

Question 74

on 4/30/y2 CFC purchase 750K of Corp. Prior to purchase US corp investment total was 1200K what is Corp increase earnings invested in US corp for y2.

Answer 74

earning = invest before cfc + (cfc +invest before * 3 quarters)/4 quaters - invest before cfc 1200+( 1950*3) = 1200+5850=7050/4 = 1762.5-1200= 562.5 earnings

Question 75

when will a foreign person not be treated as a US resident

Answer 75

Must be in the US for at least 31 days in current year and 183 for a three year period.

Question 76

Form 1120-F is prepared for foreign corp

Answer 76

Income earned by a Us branch

Question 77

A 1/3rd partner has a basis of 15 in land . The land has a 30 mortgage that was assumed by partners. what is the partners gain

Answer 77

15 basis -20 assumed by partners = $5 gain to partner due to the partnership is assuming part of loan.

Question 78

A partner with a interest of 100 received a nonliquidating dirstribution of $105 cash plus land with a basis of 50. the land had a fmv of 75. what is the basis in the land

Answer 78

Cash received was 105 - 100 original basis = 5 gainthe new land basis is zero. no basis after cash.

Question 79

A and B are partner. A contrib land with a basis of 20 and fmv of 50. B contib cash 50. land sold for 70. A & B share profit and loss equally. what is gain on land for partners

Answer 79

Since it is A interst = 70-20 basis = 50 gain. built in gain alloc amongst partners base on how they agreed to share. 50 gain - 20 A bbsis = 30 built in gain A get 10 for his personal baiss. 30-10=20 20 split 50/50 of the 50, A gets 40 ( 30 built i n gai + 10 share) B gets 10 share.

Question 80

What is an inside basis for a partner

Answer 80

is the basis of assets in the hands of partnership and is equal to the basis in the hands of the contributing partners

Question 81

A sole stockholder of an S Corp has a y4 year end basis of 43,400 During year 5 reported a loss of 19000. Also in year 5 there was a distribution of 38000 and shareholder made loan to scorp of 11000. what is shareholders reportable loss.

Answer 81

``` begin year 5 basis 43,400 less y 5 distibu (38000) = stock basis 5400 + loan to scorp ( incr basis) 11000 = 16400 basis. loss can not go below 16400 ```

Question 82

Co. has pretaxable income of 92000. Including 12000 in interest and dividends. 40% of co. property, payroll and sales in home state. what is taxable income for Co. in home state

Answer 82

I needto deduct investment income from taxable income. 92000-1200= 80000 net income *40% = 3200 net income to home state + investment income 12000= 44000 taxable income to home state

Question 83

Will Guaranty Payments will increase partnerships tax basis and partner ordinary income

Answer 83

No will not increase tax basis in partnership | Yes. Will increase partner's ordinary income.

Question 84

A 50% partner with a basis of 30000 had a loan of 12000. what is his basis

Answer 84

30000- 6000 ( other part of loan) = 24000

Question 85

A 50% partner with a 4000 in previous year. Had a loss of 12000 loss in previous year. Current year partnership had net income of 7000 and made a prorata distribution of 1000. what is partner basis

Answer 85

previous year basis was 4000. His part of loss was 6000. loss to share holder is to the extent of basis. loss 4000 and 2000 deferred to current year. Current year earning share 3500 less 500 pro rata share of distribution = 3000 less 2000 loss = 1000 basis

Question 86

When partner with land basis of 5000 receive non liquidation of land from partnership of 6000 basis and 9000 fmv. what is partners new basis in land

Answer 86

Normally basis would be the partnership basis. However, since partner basis was lower 5000 than partnership baisis at 6000. It would be 5000. His interest would be 0.= 5000 recied - 5000 baisis.

Question 87

Which entity is not taxable: LLC , Scorp, general partnership, C corp, Limited liability Partnership

Answer 87

Non liquidation distribution are not taxable to general partnership and Limited Liabilty Partnership

Question 88

How are built in gains taxed

Answer 88

they are taxed at the highest corporate tax rate

Question 89

Is income earned by a 100% owned subsidiary income or divided reported on tax returns

Answer 89

No income is not inter company | Yes on Dividends

Question 90

If 50% partner has cash interest of 45 and other partner had a loan that the partnership assumed what is partner initial basis

Answer 90

45 cash basis + 6 assumed loan = 51

Question 91

How do you calc loss deductible for partner loss: beg. basis 60, less cash dist 20, loss share 65, net captial gain 15

Answer 91

Do all basis before losses 60-20+15 55 basis - 65 loss is up to basis 55

Question 92

If a partner with a adj basis of 50 receive a nonliq of 25 cash and land with adj basis of 15 what is basis in land

Answer 92

less cash first: 50-25= 25-15 land basis = 10 new basis | Land basis is 15

Question 93

a binding contract between the IRS and Taxpayer by which the IRS will agree not to seek transfer pricing adjustments is called

Answer 93

Advance Pricing Agreement Program.