ARE. Federal Taxes Partnerships

Question 0

Are guaranteed payments made to partners deductible by the partnership?

Answer 0

Yes

Question 1

Where is the character of partnership income generally determined?

Answer 1

At the partnership level

Question 2

What share of partnership loss my a partner deduct on his/her individual return.

Answer 2

Limited to adjusted basis

which includes partners pro – rata share of partnership liabilities

Question 3

How should transactions between a less than 50% partner and a partnership be treated?

Answer 3

As if the partner were an outsider

Question 4

What is the basis of property received by a partner as a non-liquidating distribution?

Answer 4

Lower of either
1. Adjusted bases of property in hands of partnership, prior to distribution

2. Adjusted bases of partners interest in partnership, reduced by any money distributed simultaneously

Question 5

What is the basis of property received by a partner in complete liquidation?

Answer 5

Equal to partners interest in partnership reduced by any money received simultaneously

Question 6

What effect will the assumption of liability on contributed property have on a non-contributing partners bases in the partnership?

Answer 6

It will increase bases

Question 7

How should contributed (unrealized) receivables disposed of by the partnership be treated?

Answer 7

Ordinary income

Question 8

What is the due date for a calendar year partnership information return?

Answer 8

April 15

Question 9

What must be done when a partner sales or exchanges his/her entire partnership interest?

Answer 9

There must be a closing of the partnerships taxable year

Question 10

When is gain recognized by a partner who receives a distribution of property?

Answer 10

When a partner sells or otherwise disposes of the property

Question 11

What percentage of total interest in a partnership must be sold within a 12 month period for the partnership to terminate

Answer 11

50% or more

Question 12

What will a partner share of nondeductible expenses due to basis?

Answer 12

Decrease it

Question 13

True or false?

Interest and dividend income is part of a partnerships ordinary business income.

Answer 13

False

interest and dividend income represent pass through items

Question 14

Generally, How will the sell or exchange of a partners interest in the partnership be treated?

Answer 14

As a capital gain

Question 15

What conditions must be satisfied if a partnership wants to avoid filing and M – 1?

Answer 15

1. Partnership receipts are less than $250,000
2. Total partnership assets are less than $600,000 at the end of year
3. Schedules K – 1 are filed and furnished to partners

Question 16

When must a partnership complete a schedule M – 2?

Answer 16

If it is required to complete an M – 1