Which one of the following statements is correct for

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Which one of the following statements is correct for tax purposes? Partnership Abel & Benz is considered to be a continuation of Partnership Abel, Benz, Clark & Day. In forming Partnership Clark & Day, partners Clark and Day are subject to a penalty surtax if they contribute their entire distribution Before separating the two businesses into two distinct entities, the partners must obtain approval from the IRS. Before separating the two businesses into two distinct entities, Partnership Abel, Benz, Clark & Day must file a formal dissolution w Exercise 7 Curry's sale of her partnership interest causes a partnership termination. The partnership's business and financial operations are continued by the other members. What is (are) the effect(s) of the termination? I. There is a deemed distribution of assets to the remaining partners and the purchaser. II. There is a hypothetical recontribution of assets to a new partnership. I only. II only. Both I and II. Neither I nor II. Exercise 8 The personal service partnership of Allen, Baker & Carr had the following cash basis balance sheet at December 31, 2016: Assets Adjusted basis per book Market value Cash $102,000 $102,000 Unrealized accounts receivable -- 420,000 _______ _______ Totals $102,000 $522,000 Liability and Capital Note payable $ 60,000 $ 60,000 Capital accounts: Allen 14,000 154,000 Baker 14,000 154,000 Carr 14,000 154,000 _______ _______ $102,000 $522,000
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Carr, an equal partner, sold his partnership interest to Dole, an outsider, for $154,000 cash on January 1, 2017. In addition, Dole assumed Carr's share of the partnership’s liability. What amount of ordinary income should Carr report in his 2017 income tax return on the sale of his partnership interest? $0 $20,000 $34,000 $140,000
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  • Spring '17
  • Wendy Achiles
  • partner

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