704(b)extra_problems - TAX 6317 Section 704(b Extra...

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TAX 6317 Section 704(b) Extra Problems Directions: Consider each of the following situations and determine whether the "substantial economic effect" test is met in each independent case. A. Partnership XY invests surplus funds in municipal bonds and corporate stock in equal amounts. X is in a higher tax bracket than Y. The partnership agreement allocates all interest, gain, or loss on the municipal bonds to X. Y is to receive all dividends, gain, or loss on the corporate stock. B. Partners X and Y in part (A) above have changed their agreement. X will receive the first $10,000 of tax-exempt income from the municipal bonds. Y will receive the first $10,000 of dividend income from the corporate stock. The balance of both types of income and any gain or loss on either type of security is to be shared equally between the partners. C. Partners X and Y in part (A) above change their special allocation. All income from municipal bonds is to be allocated to X. All dividend income from the corporate stock is to go to Y. Any gain
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This note was uploaded on 09/16/2011 for the course TAX 6137 taught by Professor Andrewjudd during the Spring '11 term at University of Central Florida.

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704(b)extra_problems - TAX 6317 Section 704(b Extra...

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