CHAPTER21QUIZ - Partnerships 21-1 CHAPTER 21 PARTNERSHIPS...

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Partnerships 21-1 CHAPTER 21 PARTNERSHIPS EXAMINATION QUESTIONS ____1. Jacque and John formed the equal JJ Partnership during the current year, with Jacque contributing $60,000 in cash and John contributing land (basis of $30,000, fair market value of $20,000) and equipment (basis of $10,000, fair market value of $40,000). John recognizes no gain or loss on the contribution and his basis in his partnership interest is $40,000. ____2. On the first day of the current tax year, Sienna’s basis in her partnership interest was $12,000. Her Schedule K-1 from the partnership reflected the following items for the current year: share of partnership ordinary loss, $20,000; interest income from money market accounts, $3,000. On her personal tax return, Sienna will report a loss from the partnership of $20,000, and interest income of $3,000. ____3. Bradley contributes land with a value of $70,000 and a basis of $40,000 to the JST partnership in exchange for a 1/3 interest. Soon thereafter, the partnership sells the land for $100,000. Of the gain on the land sale, $40,000 is allocated to Bradley. ____4. During the current year, Jefferson and Taylor form the JT Partnership and agree to share profits and losses equally. Jefferson contributes cash of $50,000 and Taylor contributes land with a fair market value of $90,000 (subject to a $40,000 nonrecourse mortgage). On the contribution date, Taylor’s adjusted basis in the land is $50,000. Immediately after formation, Jefferson’s partnership outside basis is $70,000, Taylor’s partnership outside basis is $30,000, and JT’s basis in the land is $50,000. ____5. Andrew’s basis in his partnership interest was $20,000 at the beginning of the tax year. For the year, his share of the partnership’s loss was $20,000, and he also received a distribution of $6,000. Andrew can deduct a $14,000 loss, and the remaining $6,000 loss is suspended until a year in which he has adequate basis. 6. In the current year, Ashley formed an equal partnership with Reede. Ashley contributed land with an adjusted basis of $200,000 and a fair market value of $300,000. Ashley also contributed $100,000 cash to the partnership. Reede contributed land with an adjusted basis of $120,000 and a fair market value of $360,000. The land contributed by Ashley was encumbered by a $40,000 nonrecourse debt. Assume the partners share debt equally. Immediately after the formation, the basis of Ashley’s partnership interest is: a. $280,000. b. $360,000. c. $380,000.
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21-2 2007 Comprehensive Edition d. $400,000. e. None of the above. 7. Harrison contributed $100,000 of cash in exchange for a 50% interest in the Miller partnership capital and profits. During the first year of partnership operations, Miller had net taxable income of $50,000. In addition Harrison received a $10,000 distribution of cash from the partnership and he has a 50% share in the $14,000 of partnership recourse liabilities on the last day of the partnership year. Harrison’s adjusted basis (outside
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CHAPTER21QUIZ - Partnerships 21-1 CHAPTER 21 PARTNERSHIPS...

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