Property Transactions: Examples

Question 1

Basic Partnership, a cash-basis, calendar-year entity, began business on February 1, 2024. Basic incurred and paid the following in 2024:
Filing fees incident to the creation of the partnership
$ 3,600
Accounting fees to prepare the representations in offering materials
12,000
What is the maximum amount of organizational costs that Basic may deduct on the 2024 partnership return?

3300
0
5000
3600

Answer 1

3600

Second part is syndication fees which are not allowed for immediate deduction as start-up or organizational expenses.

Question 2

Mr. M, a cash-basis sole proprietor, secured two business loans from two different banks. The following information pertains to the loans. Assume all costs have been paid by M.
IE: 14,500; Other Costs: 500
IE: 14,000; OC: 2,500
IE: 13,500; OC: 3,000
IE: 12,000; OC: 4,500

Answer 2

Question 3

Answer 3

Question 4

Which of the following costs are subject to the Uniform Capitalization Rules of Code Sec. 263A for manufactured tangible personal property?
Off-Site Storage
Marketing
Research
Advertising

Answer 4

Off-Site Storage

Costs for the manufacture of tangible personal property to be used in trade or business are capitalized under the Uniform Capitalization Rules

Question 5

Which of the following are not representative of source documents used for gross receipts?
Cash Register Tapes
Sales Invoice
Credit Card Receipts and Statements
Forms 1099-K

Answer 5

Credit Card Receipts and Statements

Gross receipts are the income the taxpayer receives from the business. Supporting documents show the amounts and sources of the gross receipts. However, credit card receipts and statements are generally representative of purchases the taxpayer buys and resells to customers. The supporting documents associated with purchases should identify the payee, the amount paid, proof of payment, and the date incurred and include a description of the item to show that the amount was for purchases.