09/11/2022 Partnerships

Question 1

Unrealized receivables include any rights to payment not already included in income for the following items:

Answer 1

Goods delivered if payment would be treated as received for property other than a capital asset,

Services rendered or to be rendered, and

Other items of potential gain that would be ordinary income if the following partnership property were sold at its fair market value on the date of the payment:

  Mining property for which exploration expenses 
       were deducted,
  Stock in a Domestic International Sales 
         Corporation (DISC),
  Certain farm land if costs for soil and water 
         conservation or land clearing were deducted,
  Franchises, trademarks, or trade names,
  Oil or gas property for which intangible drilling and 
         development costs were deducted,
  Stock of certain controlled foreign corporations,
  Market discount bonds and short-term obligations, 
  Property subject to recapture of depreciation under 
            sections 1245 and 1250.

Question 2

The rules for the required tax year for partnerships are as follows:

Answer 2

If one or more partners having the same tax year own a majority interest (more than 50%) in partnership profits and capital, the partnership must use the tax year of those partners.

If there is no majority interest tax year, the partnership must use the tax year of all its principal partners. A principal partner is one who has a 5% or more interest in the profits or capital of the partnership.

If there is no majority interest tax year and the principal partners do not have the same tax year, the partnership generally must use a tax year that results in the least aggregate deferral of income to the partners.

Question 3

Domestic partnership must file what form & by what day

Answer 3

Form 1065
15th day of the 3rd month

Question 4

A partner’s basis in a partnership interest includes the partner’s share of a partnership liability if the liability:

Answer 4

Creates or increases the partnership’s basis in any of its assets,
Gives rise to a current deduction to the partnership, or
Is nondeductible, noncapital expense of the business.

Question 5

a partner dows not recognize loss on a partnership unless all of the following

Answer 5

The adjusted basis of the partner’s interest in the partnership exceeds the distribution
The partner’s entire interest in the partnership is liquidated
The distribution is in money, unrealized receivables, or inventory items

Question 6

NON-liquidation distribution the partner basis:

Answer 6

Is retained
A gain is only possible if the cash received exceeds the tax basis of the partnership.

Question 7

Liquidating distribution the partner basis:

Answer 7

the tax basis of the partnership is first removed from the records of the partner

A gain is only possible if the cash received exceeds the tax basis of the partnership.

Question 8

A partner will recognize gain only if

Answer 8

money included in the distribution exceeds outside basis