Chapter 14 Questions - 1 Earl acquired a 20 interest in a partnership by contributing property that had an adjusted basis to him of $8,000 and that was

Chapter 14 Questions - 1 Earl acquired a 20 interest in a...

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1. Earl acquired a 20% interest in a partnership by contributing property that had an adjusted basis to him of $8,000 and that was subject to a mortgage of $12,000. Which of the following results is correct?Capital Gain / Recognized Basis of Partnership InterestA.$1,600 / $1,600B.$- 0 - / ($1,600)C.$4,000 / $8,000D.$1,600 / $- 0 -2. On January 1, 2011, Ben and Jerry each own 50% of the B&J Fudge partnership. B&J Fudge employs the cash method of accounting and receives $1,000 in interest income each month from an unrelated party loan receivable. On July 1, 2012, Jerry purchased 50% of Ben's partnership interest. There were no other changes in partnership interest for the remainder of the 2011 year. How much does Ben report as his ratable share of the interest income for 2011?3. Which of the following would NOT total more than 50% ownership in T, F, & J Partnership for Ted?
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4. Jack and Ted formed an equal partnership. Jack contributed $10,000 cash and Ted contributed depreciable equipment that he has owned for 6 months with a fair market value of $10,000 and an adjusted basis of $2,000. Ted had taken $3,000 in depreciation on the equipment before he transferred it to the partnership. What amount should Ted report as a gain as a result of this transaction? 5. Under a partnership agreement, Sherry is to receive 25% of the partnership income, but not less than $10,000. The partnership has net income of $30,000 for 2011 before any allocation. Calculate Sherry's guaranteed payment from the partnership for 2011.A.$10,000B.$-0-C.$2,500D.$7,5006. In 2011, B invested $20,000 cash for a 55% interest in ABC Partnership. B materially participates in the partnership's business and the partnership agreement states he is liable for all of the partnership's debts. The only partnership debt at the yearend was a $17,000 loan from Cook bank. Partner B and the other general partner had a separate agreement that B's liability would not exceed $12,000. The partnership reported a $60,000 ordinary loss for 2011. Assuming there were no other adjustments to B's basis, what is the amount of B's deductible loss for 2011?
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  • Spring '13
  • MsFa
  • Interest, Generally Accepted Accounting Principles

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