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SAMPLETEST3CHAP19AND20 - Name: _ Class: _ Date: _ ID: A...

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Name: ________________________Class: ___________________Date: __________ID: A1SAMP,LEYEST3ACCTG4302CHA21True/FalseIndicate whether the statement is true or false.____1.Morgan and Kristen formed an equal partnership on August 1 of the current year. Morgan contributed$60,000 cash and land with a basis of $18,000 and a fair market value of $40,000. Kristen contributedequipment with a basis of $42,000 and a value of $100,000. Kristen and Morgan each have a basis of$100,000 in their partnership interests.____2.Emma’s basis in her BBDE LLC interest is $60,000 at the beginning of the tax year. Her allocable share ofLLC items are as follows: $20,000 of ordinary income, $2,000 tax-exempt interest income, and a $6,000long-term capital gain. In addition, the LLC distributed $12,000 of cash to Emma during the year. Assumingthe LLC had no liabilities at the beginning or the end of the year, Emma’s ending basis in her LLC interest is$88,000.____3.Julie and Kate form an equal partnership during the current year. Julie contributes cash of $160,000, andKate contributes property (adjusted basis of $90,000, fair market value of $260,000) subject to a nonrecourseliability of $100,000. As a result of these transactions, Kate has a basis in her partnership interest of $40,000.____4.Generally, gain is recognized on a proportionate current or liquidating distribution if the fair market value ofproperty distributed exceeds the partner’s basis in the partnership interest.____5.In a proportionate nonliquidating distribution of cash and a capital asset, the partner recognizes gain to theextent the amount of cash plus the fair market value of property distributed exceeds the partner’s basis in thepartnership interest.____6.Randi owns a 40% interest in the capital and profits of the RAY Partnership. Immediately before she receivesa proportionate nonliquidating distribution from RAY, the basis for her partnership interest is $60,000. Thedistribution consists of $45,000 in cash and land with a fair market value of $72,000. RAY’s adjusted basis inthe land immediately before the distribution is $36,000. As a result of the distribution, Randi recognizes again of $21,000.____7.Matt, a partner in the MB Partnership, receives a proportionate, nonliquidating distribution of propertyhaving a fair market value of $16,000 and a partnership basis of $23,000. Matt’s basis in the partnership is$10,000 before the distribution. In this situation, Matt will recognize a $6,000 gain, take a $16,000 basis inthe property, and his basis in the partnership interest is reduced to zero.____8.Zach’s partnership interest basis is $80,000. Zach receives a proportionate, liquidating distribution from aliquidating partnership of $60,000 cash and inventory having a basis of $30,000 to the partnership and a fairmarket value of $26,000. Zach assigns a basis of $20,000 to the inventory and recognizes no gain or loss.____9.A partnership has accounts receivable with a basis of $0 and a fair market value of $20,000 and depreciationrecapture potential of $30,000. All other assets of the partnership are either cash, capital assets, or § 1231assets. If a purchaser acquires a 40% interest in the partnership from another partner, the selling partner willbe required to recognize ordinary income of $20,000.
Name: ________________________ID: A2

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Term
Fall
Professor
Staff
Tags
Balance Sheet, basis, partner

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