Question 1

If a taxpayer sells a passive activity with suspended passive activity losses from prior years,what type of income can be offset by the suspended passive losses in the year of sale?

Accepted Answer

A)  Passive activity income.
B)  Portfolio income.
C)  Active business income.
D)  Any of these types of income can be offset.
E)  None of the choices are correct.The suspended losses disappear when the passive activity is sold.F) C) and E)
G) None of the above

Question 2

Nonrecourse debt is generally allocated according to the profit-sharing ratios of the partnership.

Accepted Answer

A) True 
 B)False

Question 3

Frank and Bob are equal members in Soxy Socks,LLC.When forming the LLC,Frank contributed $50,000 in cash and $50,000 worth of equipment.Frank's adjusted basis in the equipment was $35,000.Bob contributed $50,000 in cash and $50,000 worth of land.Bob's adjusted basis in the land was $30,000.On 3/15/X4,Soxy Socks sells the land Bob contributed for $60,000.How much gain (loss) related to this transaction will Bob report on his X4 return?

Accepted Answer

A)  $10,000.
B)  $15,000.
C)  $25,000.
D)  $35,000.E) None of the above
F) B) and C)

Question 4

Which of the following statements regarding a partner's basis adjustments is true?

Accepted Answer

A)  A partner's basis may never be reduced below zero.
B)  A partner must adjust his basis for ordinary income (loss) but not for separately stated items.
C)  A partnership fine or penalty paid by the partnership does not affect a partner's basis.
D)  Relief of partnership debt increases a partner's tax basis.E) B) and C)
F) A) and D)

Question 5

Which of the following would not be classified as a separately stated item?

Accepted Answer

A)  Short-term capital gains.
B)  Charitable contributions.
C)  MACRS depreciation expense.
D)  Guaranteed payments.E) A) and B)
F) B) and C)

Question 6

Adjustments to a partner's outside basis are made annually to prevent double taxation on the sale of a partnership interest or at the time of a partnership distribution.

Accepted Answer

A) True 
 B)False

Exam 14: Forming and Operating Partnerships

Nonrecourse debt is generally allocated according to the profit-sharing ratios of the partnership.

Correct Answer
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Correct Answer
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Which of the following statements regarding a partner's basis adjustments is true?

Correct Answer
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If a taxpayer sells a passive activity with suspended passive activity losses from prior years,what type of income can be offset by the suspended passive losses in the year of sale?

Correct Answer
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Adjustments to a partner's outside basis are made annually to prevent double taxation on the sale of a partnership interest or at the time of a partnership distribution.

Correct Answer
verified

Which of the following would not be classified as a separately stated item?

Correct Answer
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Exam 14: Forming and Operating Partnerships

Nonrecourse debt is generally allocated according to the profit-sharing ratios of the partnership.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements regarding a partner's basis adjustments is true?

Correct AnswerverifiedShow Answer

If a taxpayer sells a passive activity with suspended passive activity losses from prior years,what type of income can be offset by the suspended passive losses in the year of sale?

Correct AnswerverifiedShow Answer

Adjustments to a partner's outside basis are made annually to prevent double taxation on the sale of a partnership interest or at the time of a partnership distribution.

Correct AnswerverifiedShow Answer

Which of the following would not be classified as a separately stated item?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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