In the XY Partnership, X is the general partner with a 20% interest and Y is the limited partner with an 80% interest. How is partner Y’s basis affected if Y guarantees a partnership nonrecourse loan of $50,000 to a bank?Y gets a $10,000 increase in basis.
Y gets a $40,000 increase in basis.
Y gets a $50,000 increase in basis.
Y gets no increase in basis.
Math Tutor or Teacher’s response 30 Mar 2018
XY Partnership has the following assets and liabilities at year-end. The book basis and the ta basis are the same amountAssets
Machine: Basis: $10,000 Value: $5,000
Building: Basis: $80,000 Value: $82,000
Note 1: Basis: $ 3,000 Value: $ 3,000
Note 2: Basis: $90,000 Value: $90,000Note 1 is a nonrecourse note attached to the machine; Note 2 is a nonrecourse note attached to the building. What is the amount of the partnership’s minimum gain?$0
C is an equal partner in ABC Partnership. The partnership has made no election under Section 754. C sells her interest to E for its fair market value of $99,000 when her basis was $88,000. At year-end, the assets of the partnership are as follows:Cash Basis: $22,500 Market: $22,500
Accounts receivable Basis: $45,000 Market: $45,000
Inventory Basis: $90,000 Market: $94,500
Land Basis: $90,000 Market: $180,000
Total Basis: $247,500 Market: $342,000Assuming that C’s outside basis equaled the partnership’s inside basis at the time of the sale, what is E’s basis in the inventory at year end?$0
unless an election under section 754 is made or is in effect for the year of sale, no adjustment is made to the partnership’s adjusted basis of its assets (“inside basis”), §743(a), unless there is a mandatory negative adjustment triggered by a substantial built-in loss in the partnership’s assets, see §743(d).
Which of the following will not allow a special allocation to be considered as substantial?The special allocation is considered to be pro rata distribution.
The special allocation is not considered to be a shifting or transitory allocation.
The special allocation is provided for in the partnership agreement.
The special allocation violates the overall tax effect rule.
X and Y are equal partners in the XY Partnership and share profits and losses accordingly. At the end of 20X1, the partnerships capital accounts reflect the following numbers due to a special allocation of depreciation:
Capital X. Capital Y
($20,000) $60,000All the assets are sold for $40,000. How will the liquidation affect X if the special allocation is to be respected?X contributes $20,000 and receives $30,000.
X contributes $20,000 and receives nothing.
X contributes nothing.
X receives nothing.
On March 1, 20X0, M retired from the MNO partnership, a calendar-year partnership. M continued to receive retirement payments until February 28, 20X1, when his entire partnership interest was liquidated. For tax purposes. When did M cease to be regarded as a Partner?March 1, 20X0
December 30, 20X0
December 31, 20X1
February 28, 20X1
Which of the following is not an example of a partnership where capital is a material income-producing factor?Five individuals open a hardware store as a partnership.
Four individuals form a child care service partnership.
Three college students form a resale bookstore.
Two individuals form a steel company.
Which of the following statements is false concerning the requirements of the atom bomb test (constructive liquidation) of Regulation Section 1.752-1?Limited partners, not general partners, are deemed to have their interests liquidated.
Partners must restore negative capital accounts after the constructive liquidation.
Partnership assets are considered to be worthless and sold for their worthless value.
Partnership liabilities are deemed to be due and payable.