Chapter 11 Exam Review

Question 1

Partner’s Basis in contributed items

Answer 1

is exchanged for basis in partnership interest received

Question 2

“Hot Assets are”

Answer 2

Unrealized receivables and inventory

Question 3

The distributee’s basis in (noncash) property received in a liquidating distribution is

Answer 3

any excess of his AB in the partnership interest immediately before distribution over any amount of money received.

Question 4

The basis to a partner of property distributed “in Kind” in complete liquidation of the partner’s interest is the

Answer 4

AB of the partner’s interest reduced by any cash distributed to the partner in the same transaction

Question 5

Partnership-level elections examples are

Answer 5

1. accounting methods
2. tax year
3. inventory methods
4. Start-up/organizational costs
5. Installment sales
6. Section 179
7. Involuntary conversion gains
8. Depreciation methods

Question 6

An individual recognizes compensation as ordinary income when a partnership interest is received in exchange for services at

Answer 6

FMV of the partnership interest received

Question 7

Partnership basis equals

Answer 7

1. • Cash contributed
2. • AB of property contributed
3. • Partner’s share of partnership liabilities

Minus
4. - Liability of partner assumed by partnership

Question 8

(UBI) Unrelated Business Income is

Answer 8

Income from a trade or business regularly carried on that is not substantially related to charitable, educational or other purpose for an organizations tax exempt status

Question 9

The Holding Period of a partner’s interest includes

Answer 9

the holding period of contributed capital and section 1231 assets

Question 10

Sale or exchange of partnership interest results in

Answer 10

a capital gain or loss

Question 11

Upon the gift of a partnerships interest is recognized as a

Answer 11

No gain, unless the interest exceeds the AB

Question 12

A services partnership is one in which

Answer 12

capital is not a material income-producing factor

Question 13

Guaranteed Payments are

Answer 13

ordinary income to the partner

Question 14

The partnerships basis in the equipment is

Answer 14

the partners AB in the same equipment

Question 15

Proper tax treatment of partnership land

Answer 15

1. Allocate any pre-contribution gain or loss to the contributing partner
2. Followed by their proportional share of gain or loss. The remaining gain is shared equally among the partners per partnership agreement

Question 16

A partner will generally not recognize income upon

Answer 16

1. contribution of property to a partnership

2. property subject to a mortgage unless the liability exceeds the basis of the property

Question 17

Gain or loss on sale of Partnership Interest is calculated by

Answer 17

1. • Money received
2. • Liability relief

Minus Adjusted basis

Question 18

Partnership Basis adjustments include:

Answer 18

1. Subtract life insurance premiums
2. Subtract any penalties incurred
3. Asset purchases such as land does not impact basis