IHI 54

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Tina and Betty formed a partnership. Tina received a 40 percent interest in the partnership in exchange for land with an adjusted basis to her of $60,000 and a fair market value of $80,000. Betty received a 60 percent interest in the partnership in exchange for $120,000 of cash. Three years after the date of contribution, the land contributed by Tina was sold by the partnership to an unrelated third party for $90,000. How much gain was required to be allocated to Tina as a result of the sale by the partnership?
Answer
A. $4,000.
B. $12,000.
C. $24,000.
D. $30,000.
When inventory that was contributed to a partnership in exchange for a partnership interest is eventually sold by the partnership, how will the character of the income or loss be determined?
Answer
A. The character of any income or loss will be ordinary regardless of when the contributed property is sold by the partnership and regardless of the character of the asset in the hands of the partnership.
B. The character of any income or loss will be ordinary if the contributed property is sold by the partnership within five years after the date of contribution regardless of the character of the asset in the hands of the partnership
C. The character of any income or loss will be based on the character of the asset in the hands of the partnership regardless of when the contributed property is sold by the partnership.
D. The character of any income or loss will be ordinary to the extent of the contributing partner’s built-in gain or loss in the property at the time of the contribution regardless of when the contributed property is sold, and any balance will based on the character of the asset in the hands of the partnership.
Barbara and Bill formed an equal partnership, B&B, a general partnership, on January 1, 2011. Barbara contributed $100,000 in exchange for her one-half interest. Bill contributed land worth $100,000 that had an adjusted basis to him of $30,000 in exchange for his one-half interest. Which of the following statements is accurate with respect to this transaction?
Answer
A. None of Barbara, Bill, or B&B recognized any gain or loss.
B. Bill recognized gain of $70,000 , but Barbara and B&B did not recognize any gain or loss.
C. B&B recognized gain or $70,000 , but Barbara and Bill did not recognize any gain or loss.
D. Bill and B&B each recognized $70,000 of gain, but Barbara did not recognize any gain or loss.
Jim, one of two equal partners of the JJ Partnership, a general partnership, contributed business property with an adjusted basis to him of $15,000 and a fair market value of $10,000 to the JJ Partnership. Jim’s capital account was credited with $10,000. The property later was sold for $12,000. As a result of this sale, how much gain or loss must Jim report on his personal income tax return?
Answer
A. $1,000 gain.
B. $1,500 loss.
C. $2,000 gain.
D. $3,000 loss.
On January 1, 2011, Connie, Jill, and Hillary , formed a three-person equal partnership with Connie and Jill each contributing $100,000 and Hillary contributing securities with an adjusted basis to her of $60,000 and a fair market value of $100,000. On September 30, 2011, the partnership sold the securities for $130,000. How much gain was required to be allocated to Hillary as a result of the sale by the partnership?
Answer
A. $30,000.
B. $40,000.
C. $50,000.
D. $70,000.
Ronald and Roy formed an equal partnership, R&R Partnership, a general partnership, on January 1, 2011. Ronald contributed $100,000 in exchange for his one-half interest in R&R partnership. Roy contributed land worth $100,000 and with an adjusted basis to Roy of $30,000 in exchange for his one-half interest in the partnership. Roy is a real estate developer, and at the time of the contribution, the land was inventory in his hands. The land is a capital asset in the hands of R&R Partnership. If R&R Partnership sells the land in 2017 to an unrelated taxpayer for $180,000,how much gain will be recognized by R&R Partnership and what will be the character of the gain?
Answer
A. $80,000, all of which gain will be ordinary income
B. $150,000,all of which gain will be capital gain.
C. $150,000,all of which gain will be ordinary income.
D. $150,000, consisting of $80,000 capital gain and $70,000 ordinary income.
At the beginning of 2011, Margaret’s adjusted basis in her 30 percent interest in MP Partnership, a general partnership, was $3,000. During 2011, Margaret did not make any additional contributions to MP Partnership, and Margaret’s share of MP Partnership liabilities did not change. During 2011, MP Partnership distributed $5,000 to Margaret, and MP Partnership had the following items of partnership income, deduction, gain and loss for 2011:
Taxable income $15,000
Tax-exempt interest $6,000
Section 1231 loss ($10,000)
What is Margaret’s adjusted basis in her partnership interest in MP Partnership at the end of 2011?
Answer
A. 0.
B. $1,300.
C. $9,000.
D. $2,700.
Glenda received a proportionate nonliquidating distribution from the EFG Partnership. The distribution consisted of $10,000 cash and property with an adjusted basis to the partnership of $34,000 and a fair market value of $42,000. Immediately before the distribution, Glenda’s adjusted basis in her partnership interest was $60,000. How much is Glenda’s basis in the noncash property distributed to her?
Answer
A. $10,000.
B. $34,000.
C. $42,000.
D. $50,000.
Lara owns a 60 percent interest and Lance owns a 40 percent interest in LL Partnership, a general partnership. On January 1, 2011, Lara’s adjusted basis in her partnership interest was $60,000 and Lance’s adjusted basis for his partnership interest was $10,000. During 2011, LL Partnership had net taxable ordinary income of $50,000 and the following separately stated items: qualified dividend income of $1,000; taxable interest income of $2,600; charitable contributions of $3,000; and Section 179 expense of $20,000. During 2011, partnership liabilities decreased by $25,000 and there were no distributions made to either partner (assume liabilities are allocated in proportion to their percentage ownership of the partnership). Which of the following correctly states the basis in each partner’s interest in LL Partnership on December 31, 2011?
Answer
A. Lara: $63,360 and Lance: $12,240.
B. Lara: $65,520 and Lance: $12,680.
C. Lara: $90,360 and Lance: $30,240.
D. Lara: $92,160 and Lance: $31,440.
Ten years ago, Lisa acquired a one-third interest in Dee Associates, a general partnership. In the current taxable year, when Lisa’s entire interest in the partnership was liquidated, Dee Associates’ assets consisted of cash of $20,000 and tangible property with an adjusted basis to the partnership of $46,000 and a fair market value of $40,000 on the date of distribution. Dee Associates had no liabilities. Lisa’s adjusted basis in her one-third interest in the partnership was $22,000. Lisa received cash of $20,000 in complete liquidation of her entire interest. How much loss will Lisa recognize upon receipt of the liquidating distribution?
Answer
A. 0.
B. $2,000 short-term capital loss.
C. $2,000 long-term capital loss.
D. $2,000 ordinary loss.
Mark, Pete and Mickey are equal partners in the 2MP Partnership, a general partnership. On January 1, 2011, Mark’s adjusted basis in his partnership interest was $15,000, Pete’s adjusted basis in his partnership interest was $10,000, and Mickey’s adjusted basis in his partnership interest was $20,000. The partnership had taxable income of $30,000 in 2011 which was allocated equally among the partners. On December 31, 2011, the partnership made a non-liquidating distribution of $25,000 cash to Pete. How much income or gain did Pete recognize as a result of the distribution?
Answer
A. 0.
B. $5,000.
C. $15,000.
D. $25,000.
Ellen is a 25 percent partner in EFGH Partners, a general partnership. Ellen’s adjusted basis in her partnership interest is $18,000. During the current taxable year, Ellen received a non-liquidating distribution of land from EFGH Partners that had an adjusted basis to the partnership of $23,000 and a fair market value of $45,000 on the date of distribution. What is Ellen’s basis in the land received in the non-liquidating distribution?
Answer
A. 0.
B. $18,000.
C. $23,000.
D. $45,000.