d. In 2008, John and Justin form a partnership and agree to share profits and losses equally. John contributes 59. cash of $100,000 and Justin contributes property (a capital asset) with an FMV of $100,000 and and adjusted basis of $60,000. During 2010, the partnership sells the property, which is a capital asset in the hands of the partnership, for $150,000. Which of the following statements is correct regarding the 2010 tax year? Justin would be allocated $65,000 of the gain a. Justin would be allocated $50,000 of the gain b. Justin would be allocated $45,000 of the gain c. Justin would be allocated $25,000 of the gain d.
424 Principles of Business Taxation Chapter 14 © 2010 CCH. All Rights Reserved. Wayne owns 60 percent and Larry owns 40 percent of the profits and losses of the WL partnership. On 60. January 1, 2010, the basis in their respective partnership interests is $60,000 and $10,000. During 2010, WL reports taxable ordinary income of $50,000 and has the following separately stated items: qualified dividend income of $1,000; taxable interest income of $2,600; charitable contributions of $3,000; and Sec. 179 expense of $20,000. During the year, partnership liabilities decreased by $25,000 and there were no distributions made to either partner. On December 31, 2010, which of the following correctly states the basis in each partner’s interest in WL? d. For the year ending December 31, 2010, the partnership of Charles and Paul had book income of $75,000, 61. which included the following: (a) Short-term capital loss, $3,100; (b) Long-term capital gain (on sale of securities), $4,300; (c) Section 1231 gain, $1,500; (d) Ordinary income (Section 1245 recapture), $600; and (e) Domestic dividends, $1,000. The partners share profits and losses equally. What is each partner’s share of partnership income (excluding all partnership items which must be accounted for separately) to be reported as taxable for 2010? e. On July 1, Nick acquired a 20-percent interest in the partnership of Dolhon & Marchese, by contributing 62. a parcel of land for which his basis was $8,000. At the date of the contribution, the land had a fair market value of $20,000 and was subject to a mortgage of $4,000. Responsibility for the mortgage was assumed by the partnership. Assuming there are no other partnership liabilities, the basis of Nick’s interest in the partnership is: d. Which one of the following is not a deductible expense in computing partnership ordinary income? 63. Guaranteed payments to partners a. Salaries and wages other than to partners b. Investment interest expense c. Contributions to employee benefit plans d. All of the above are deductible in computing partnership ordinary income
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