Multiple choice 35000 40000 45500 correct 49500

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Multiple Choice$35,000.$40,000.$45,500.Correct$49,500.ExplanationJerry's initial tax basis is increased by his cash contribution and share of separately stated items (long-term capital gain and qualified dividends). His basis is then reduced by his share of the reduction in partnership debt, non-deductible expenses, and ordinary loss ($50,000 + $10,000 + $3,000 + $2,000 − $4,000 − $500 − $15,000 = $45,500).
17.In what order should the tests to determine a partnership's year end be applied?
18.Which of the following entities is not considered a flow-through entity?
19.Which of the following statements exemplifies the entity theory of partnership taxation?
20.Tom is talking to his friend Bob, who has an interest in Freedom, LLC, about purchasing his LLC interest. Bob's outside basis in Freedom, LLC is $10,000. This includes his $2,500 one-fourth share of the LLC's debt. Bob's 704(b) capital account is $17,000. If Tom bought Bob's LLC interest for $17,000, what would Tom's outside basis be in Freedom, LLC?Multiple Choice$10,000.$14,500.$17,000.$19,500.CorrectExplanationTom's basis would equal the amount he paid for his LLC interest plus his share of the LLC debt. Thus, he would have a starting basis of $17,000 + $2,500 of LLC debt, or $19,500.

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