As a general rule when a person obtains an interest in partnership capital

As a general rule when a person obtains an interest

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11. As a general rule, when a person obtains an interest in partnershipcapital through rendition of services, ordinary income is recognized tothe extent of the fair market value of the interest received. *a. Trueb. False 12. Generally, neither the partner nor the partnership recognize gain or loss on the contribution of property to the partnership in exchange for an interest in the partnership's capital and profits.
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13. Goodwill is not property and therefore cannot be transferred to a partnership without the recognition of income. 14. A proper measure of the basis of a partner's interest in a partnership, particularly a trading partnership, can be obtained by reference to the partner's capital account balance. 15. When contributed property is transferred subject to a mortgage or other indebtedness or when a partner's indebtedness is assumed by the partnership, the contributing partner's basis in the partnership interest is reduced by the amount of the indebtedness assumed by the other partners. *a. Trueb. False 16. The partner's tax basis tracks what each partner is entitled to receive upon dissolution of the partnership. 17. When a partnership assumes or reduces one of its liabilities or thepartners change their relative profit and loss ratios, the adjustment to the partner's basis is affected by treating the change as if there were a transfer of money between the partners and the partnership. 18. In the case of recourse debt, if the partnership defaults and the collateral is insufficient to satisfy the debt or if no property is pledged as collateral on the debt, the lender can go after the partnership assets and assets of the general partners to satisfy the debt.
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19. Each partner's allocable share of partnership items is deemed to betaxed to the partner on the last day of the entity's tax year, regardless of the amount that has been distributed to the partner during the year. *a. Trueb. False 20. The partners include the amounts reported on their respective Schedule K-1s on their income tax returns for the year that includes the last day of the partnership's tax year, but only to the extent thatthe income was distributed (in cash or property) to them during the year.
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