CHAPTER 20--CORPORATIONS AN

True false 59 like s corporations partnerships serve

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True False 59. Like S corporations, partnerships serve as conduits for their owners. True False 5
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60. Since partnerships are not subject to income tax, they are not required to file income tax returns. True False 61. Various elections are made by a partnership (e.g., choice of accounting methods) even though a partnership is not considered a separate taxable entity for some purposes. True False 62. If property contributed to a partnership is subject to a liability (assumed by the partnership), gain is recognized to the contributing partner to the extent of the liability. True False 63. If a partnership interest is received in exchange for services rendered, ordinary income must be recognized by the recipient of the capital interest. True False 64. A contributing partner’s basis in a partnership interest received is the sum of money contributed, plus the basis of any other property transferred to the partnership. True False 65. Changes in the liabilities (trade accounts payable, bank loans, etc.) of a partnership will affect the basis of a partnership interest. True False 66. A partner’s basis in the partnership interest is increased by his or her share of the capital losses incurred by the partnership. True False 67. A partner’s basis in the partnership interest is increased by his or her share of the tax-exempt income received by the partnership. True False 68. Jenny contributes land (adjusted basis of $300,000; fair market value of $280,000) and cash of $40,000 to the newly formed Green Partnership. Green will have a basis in the land of $280,000. True False 69. The holding period to the partnership of property contributed by a partner includes the period during which the property was held by the contributing partner. True False 70. A partnership’s ordinary income or loss is computed without considering any foreign taxes paid. This item is separately stated and passes through to the individual partners. True False 71. The domestic production activities deduction is determined at the partnership level and then passed through to each individual partner based on his or her partnership interest. True False 6
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72. Partners cannot deduct partnership losses that exceed the basis in their partnership interests. True False 73. Jordan and his two brothers are equal owners in Taupe Partnership. If Jordan sells business property (basis of $230,000; fair market value of $180,000) to Taupe for $180,000, he can recognize the $50,000 realized loss. True False 74. Guaranteed payments are deductible by the partnership and are taxable to the partner receiving the payments. True False
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  • Spring '12
  • honig
  • Corporation, Income tax in the United States, C CORPORATION

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