Partnership Taxation Flashcards Preview

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Flashcards in Partnership Taxation Deck (47):
1

T/F

Generally, gain is recognized when appreciated property is transferred to a partnership in exchange for a partnership interest

FALSE

Generally no gain OR loss is recognized on the contribution of property in exchange for a partnership interest

2

Gain will be recognized if property transferred to a partnership is encumbered by a mortgage and the partnership's assumption of the mortgage results in a decrease in the transferor's individual liabilities that ______ the basis of the property transferred

Exceeds

3

A taxpayer must recognize _______ (ordinary income/a capital gain) when a capital interest in a partnership is received as compensation for services rendered

Ordinary Income

4

The amount of ordinary income a taxpayer must recognize when a capital interest in a partnership is received as compensation for services rendered is equal to their partnership interest received (x%) * ______ (FMV of Partnership/Adjusted Basis of Partnership)

FMV of Partnership

5

T/F

The holding period of a partnership interest acquired in exchange for a contributed capital asset begins on the date the partner is admitted to the partnership

FALSE

The holding period for a partnership interest that is acquired through a contribution of property depends upon the nature of the contributed property. If the contributed property was a capital asset or Sec. 1231 asset to the contributing partner, the holding period of he acquired partnership interest includes the period of time that the capital asset or Sec. 1231 asset was held by the partner. For all other contributed property, a partner's holding period for a partnership interest begins when the partnership interest is acquired

6

T/F

The holding period of a partnership interest acquired in exchange for a contributed capital asset begins on the date the partner transfers the asset to the partnership

FALSE


The holding period for a partnership interest that is acquired through a contribution of property depends upon the nature of the contributed property. If the contributed property was a capital asset or Sec. 1231 asset to the contributing partner, the holding period of he acquired partnership interest includes the period of time that the capital asset or Sec. 1231 asset was held by the partner. For all other contributed property, a partner's holding period for a partnership interest begins when the partnership interest is acquired

7

T/F

The holding period of a partnership interest acquired in exchange for a contributed capital asset begins on the date the partner's holding period of the capital asset began

TRUE


The holding period for a partnership interest that is acquired through a contribution of property depends upon the nature of the contributed property. If the contributed property was a capital asset or Sec. 1231 asset to the contributing partner, the holding period of he acquired partnership interest includes the period of time that the capital asset or Sec. 1231 asset was held by the partner. For all other contributed property, a partner's holding period for a partnership interest begins when the partnership interest is acquired

8

T/F

The holding period of a partnership interest acquired in exchange for a contributed capital asset begins on the date the partner is first credited with the proportionate share of partnership capital

FALSE


The holding period for a partnership interest that is acquired through a contribution of property depends upon the nature of the contributed property. If the contributed property was a capital asset or Sec. 1231 asset to the contributing partner, the holding period of he acquired partnership interest includes the period of time that the capital asset or Sec. 1231 asset was held by the partner. For all other contributed property, a partner's holding period for a partnership interest begins when the partnership interest is acquired

9

When an individual contributes stock to a partnership, their basis in the partnership will be will be the ________ (original basis of the stock/FMV of stock at transfer date)

Original Basis of the Stock

10

T/F

The holding period of property acquired by a partnership as a contribution to the contributing partner's capital account begins with the date of contribution to the partnership

FALSE

Since the partnership's basis for the contributed property is determined by reference to the contributing partner's former basis for the property (i.e., transferred basis), the partnership's holding period includes the period during which the property was held by the contributing partner

11

T/F

The holding period of property acquired by a partnership as a contribution to the contributing partner's capital account includes the period during which the property was held by the contributing partner

TRUE

Since the partnership's basis for the contributed property is determined by reference to the contributing partner's former basis for the property (i.e., transferred basis), the partnership's holding period includes the period during which the property was held by the contributing partner

12

T/F

The holding period of property acquired by a partnership as a contribution to the contributing partner's capital account is equal to the contributing partner's holding period prior to contribution to the partnership

FALSE

Since the partnership's basis for the contributed property is determined by reference to the contributing partner's former basis for the property (i.e., transferred basis), the partnership's holding period includes the period during which the property was held by the contributing partner

13

T/F

The holding period of property acquired by a partnership as a contribution to the contributing partner's capital account depends on the character of the property transferred

FALSE

Since the partnership's basis for the contributed property is determined by reference to the contributing partner's former basis for the property (i.e., transferred basis), the partnership's holding period includes the period during which the property was held by the contributing partner

14

T/F

Filing fees incident to the creation of a partnership are deductible organizational costs

TRUE

15

T/F

Accounting fees to prepare the representations in offering materials are deductible organizational costs

FALSE

Accounting fees to prepare the representations in offering materials are considered syndication fees.

16

These fees include the costs connected with the issuing and marketing of partnership interests such as commissions, professional fees, and printing costs

Syndication Fees

17

T/F

Syndication fees must be capitalized and can neither be amortized nor depreciated

TRUE

18

A partner's distributive share of partnership losses is generally deductible to the extent of ____

The tax basis for the partner's partnership interest at the end of the year

19

T/F

In computing the ordinary income of a partnership, a deduction is allowed for contributions to recognized charities

FALSE

Contributions to charities and STCLs cannot be deducted in computing a partnership's ordinary income because they are subject to special limitations and must be separately passed through so that any applicable limitations can be applied at the partner level

20

T/F

In computing the ordinary income of a partnership, a deduction is allowed for the first $100 of dividends received from qualifying domestic corporations

FALSE

Dividends are an item of portfolio income and must be separately passed through to partners in order to retain its character as portfolio income when reported on partner's returns

21

T/F

In computing the ordinary income of a partnership, a deduction is allowed for STCL

FALSE

Contributions to charities and STCLs cannot be deducted in computing a partnership's ordinary income because they are subject to special limitations and must be separately passed through so that any applicable limitations can be applied at the partner level

22

T/F

In computing the ordinary income of a partnership, a deduction is allowed for guaranteed payments to partners

TRUE

23

T/F

The At-Risk limitation will apply in determining a partner's deduction for that partner's share of partnership losses

TRUE

The deductibility of partnership losses is limited to the amount of the partner's at-risk basis

24

T/F

The Passive Loss limitation will apply in determining a partner's deduction for that partner's share of partnership losses

TRUE

The deductibility of partnership losses is subject to the passive activity loss limitations if they are applicable

25

T/F

Tax-exempt interest income will be included in calculating total ordinary income for a partnership

FALSE

This remains tax-exempt and must be excluded from the computation of ordinary income

26

T/F

Dividends from foreign corporations will be included in calculating total ordinary income for a partnership

FALSE

The dividends from foreign corporations are separately allocated to partners and must be excluded from the computation of the partnership's ordinary income

27

T/F

Net Rental Income will be included in calculating total ordinary income for a partnership

FALSE


The net rental income is separately allocated to partners and must be excluded from the computation of the partnership's ordinary income

28

Guaranteed payments made by a partnership to partners for services rendered to the partnership that are deductible business expenses under the Internal Revenue Code are deductible expenses on the US Partnership Return of Income, Form ____ in order to arrive at partnership income (loss)

1065

29

Guaranteed payments made by a partnership to partners for services rendered to the partnership that are deductible business expenses under the Internal Revenue Code are Included on Schedule ______ to be taxed as ordinary income to the partners

K-1

30

These are payments to partners for services or the use of capital without regard to partnership income

Guaranteed Payments

31

T/F

In a family partnership, services performed by family members must first be reasonably compensated before income is allocated according to the capital interests of the partners

TRUE

32

A partner who contributes securities, which are then sold later that year, will recognize ____ (their portion/all) of the gain

ALL

33

A calendar-year taxpayer in a partnership that has a fiscal year ending June 30 will recognize what income in their x1 return?

a) their portion of: 1/2 of the ordinary income from June 30 x1 and half of the ordinary income from June 30 x2

b) their portion of the entire June 30 x1 ordinary income

B

34

T/F

A partner's tax basis is increased by their distributive share of ordinary income

TRUE

35

T/F

A partner's tax basis is increased by their receipt of guaranteed payments

FALSE

36

T/F

Guaranteed payments increase an individual's ordinary income, but does not affect the individual's tax basis in the partnership

TRUE

37

T/F

Like guaranteed payments, cash nonliquidating distributions do not affect an individual's tax basis in the partnership

FALSE

This will decrease the individual's tax basis in the partnership

38

T/F

A partnership's municipal bond interest income will not affect an individual's tax basis in the partnership because municipal bonds are non-taxable

FALSE

This will still increase the individual's tax basis in the partnership

39

The basis of property received from a decedent is generally _____ (FMV/Decedent's Basis)

FMV

Therefore a new partnership interested received as an inheritance will have a basis of FMV to the person receiving it as of the date used for estate tax purposes

40

A loss is ______ (allowed/disallowed) if incurred in a transaction between a partnership and a person owning (directly or constructively) more than _____ of capital or profits interest. What does constructively mean in this sense?

Disallowed

50%

Even if the individual owns less than 50%, if they have a close relative (sister, parent, spouse, child, etc.) that owns a portion, then their portion is also included as constructive ownership.

41

A partnership is terminated for tax purposes when there is a sale or exchange of _____ or more of the total interests in the partnership capital and profits within any _____ period

50%

12 Month

42

A partnership interest is a _____ and a sale generally results in a _______, except that _____ must be reported to the extent of the selling partner's share of unrealized receivables and appreciated inventory

Capital Asset

Capital Gain/Loss

Ordinary Income

43

T/F

The basis to a partner of property distributed in complete liquidation of the partner's interest is the adjusted basis of the partner's interest increased by any cash distributed to the partner in the same transaction

FALSE

44

T/F

The basis to a partner of property distributed in complete liquidation of the partner's interest is the adjusted basis of the partner's interest reduced by any cash distributed to the partner in the same transaction

TRUE

45

T/F

The basis to a partner of property distributed in complete liquidation of the partner's interest is the adjusted basis of the property to the partnership

FALSE

46

T/F

The basis to a partner of property distributed in complete liquidation of the partner's interest is the FMV of the property

FALSE

47

A distributee partner can recognize loss only upon the complete liquidation of the partner's interest through the receipt of only ___, _____, or _____

Money
Unrealized Receivables
Inventory