PLLC_Chapter4_Solutions.pdf - Practical Guide to...

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Practical Guide to Partnerships and LLCs—Instructor’s Guide Solutions1Chapter 4 – Calculation of Partnership Taxable IncomeReading:Paragraphs 401-404.02.1.What types of items should be separately stated on Schedules K and K-1?
©2015 CCH Incorporated. All Rights Reserved.4.When there is an involuntary conversion of partnership property, can the partners getdeferral of gain if the proceeds of the involuntary conversion are distributed to thepartners, who then invest in replacement property?No.
2.Where do all of the nonseparately stated items go on the Form 1065?Where is thenet of all of those items reported on Form 1065?
3.Which of the following are examples of the entity approach to partnership taxation,and which are examples of the aggregate approach?
Practical Guide to Partnerships and LLCs—Instructor’s Guide Solutions25.Code Section 1244 allows for ordinary losses on the sale of stock, as long as the stockis sold by its original owner.If a partnership buys stock and distributes it to itspartners, who then sell it for a loss, will the sale qualify for ordinary loss treatmentunder Code Sec. 1244?No.6.What three categories do payments to partners fall into?
©2015 CCH Incorporated. All Rights Reserved.
7.How is a Sec. 707(a) payment to a partner for services treated by the partner and thepartnership?When will it be recognized by a cash basis partner?When will it bededucted by a partnership?

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