Partnership Taxation Paper 1

1

At partnership inception, Black acquires a 50% interest in Decorators Partnership by contributing property with an adjusted basis of $250,000. Black recognizes a gain if
I. The fair market value of the contributed property exceeds its adjusted basis.
II. The property is encumbered by a mortgage with a balance of $100,000.






2

On June 1, 2013, Kelly received a 10% interest in Rock Co., a partnership, for services contributed to the partnership. Rockís net assets at that date had a basis of $70,000 and a fair market value of $100,000. In Kellyís 2013 income tax return, what amount must Kelly include as income from transfer of the partnership interest?






3

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






4

The following information pertains to Carrís admission to the Smith & Jones partnership on July 1, 2012:
ē Carrís contribution of capital: 800 shares of Ed Corp. stock bought in 1999 for $30,000; fair market value $150,000 on July 1, 2012.
ē Carrís interest in capital and profits of Smith & Jones: 25%.
ē Fair market value of net assets of Smith & Jones on July 1, 2012, after Carrís admission: $600,000.
Carrís gain in 2012 on the exchange of the Ed Corp. stock for Carrís partnership interest was






5

The holding period of property acquired by a partnership as a contribution to the contributing partnerís capital account






6

On September 1, 2012, James Elton received a 25% capital interest in Bredbo Associates, a partnership, in return for services rendered plus a contribution of assets with a basis to Elton of $25,000 and a fair market value of $40,000. The fair market value of Eltonís 25% interest was $50,000. How much is Eltonís basis for his interest in Bredbo?






7

Basic Partnership, a cash-basis calendar-year entity, began business on February 1, 2013. Basic incurred and paid the following during 2013:
Filing fees incident to the creation of the partnership $ 3,600
Accounting fees to prepare the representations in offering materials 12,000
If Basic wishes to deduct organizational costs, what is the maximum amount that Basic can deduct on the 2013 partnership return?






8

Thompsonís basis in Starlight Partnership was $60,000 at the beginning of the year. Thompson materially participates in the partnershipís business. Thompson received $20,000 in cash distributions during the year. Thompsonís share of Starlightís current operations was a $65,000 ordinary loss and a $15,000 net long-term capital gain. What is the amount of Thompsonís deductible loss for the period?






9

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






10

Which of the following limitations will apply in determining a partnerís deduction for that partnerís share of partnership losses?
At-risk . . . . . Passive loss






Result

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