I the guaranteed payment increases peterss tax basis

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I. The guaranteed payment increases Peters's tax basis in Spano by $16,000. II. The guaranteed payment increases Peters's ordinary income by $16,000. I only. II only. Both I and II. Neither I nor II. Exercise 3 White has a one-third interest in the profits and losses of Rapid Partnership. Rapid's ordinary income for the 2017 calendar year is $30,000, after a $3,000 deduction for a guaranteed payment made to White for services rendered. None of the $30,000 ordinary income was distributed to the partners. What is the total amount that White must include from Rapid as taxable income in his 2017 tax return? $3,000 $10,000 $11,000 $13,000 Exercise 4 A guaranteed payment by a partnership to a partner for services rendered, may include an agreement to pay I. A salary of $5,000 monthly without regard to partnership income. II. A 25% interest in partnership profits. I only. II only. Both I and II. Neither I nor II. Exercise 5
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Under the Internal Revenue Code sections pertaining to partnerships, guaranteed payments are payments to partners for Payments of principal on secured notes honored at maturity. Timely payments of periodic interest on bona fide loans that are not treated as partners' capital. Services or the use of capital without regard to partnership income. Sales of partners' assets to the partnership at guaranteed amounts regardless of market values. Exercise 6 Abe, Betsy, and Dan decide to form the equal ABD partnership at the beginning of Year One. Abe contributed depreciable assets that he has owned for five years that have a basis of $15,000 and a value of $20,000. Betsy contributed $20,000 cash. Dan contributed $12,000 in cash and land with a basis of $5,000 and a value of $8,000. How much income is allocated to Abe if the partnership sells the assets contributed by Abe for $18,000? $0 $1,000 $3,000 $5,000 Exercise 7 In computing the ordinary income of a partnership, a deduction is allowed for Contributions to recognized charities. The first $100 of dividends received from qualifying domestic corporations. Short-term capital losses. Guaranteed payments to partners. Exercise 8 Evan, a 25% partner in Vista Partnership, received a $20,000 guaranteed payment in 2017 for deductible services rendered to the partnership. Guaranteed payments were not made to any other partner. Vista's 2017 partnership income consisted of: Net business income before guaranteed payments $80,000 Net long-term capital gains 10,000 What amount of income should Evan report from Vista Partnership on her 2017 tax return? $37,500 $27,500 $22,500 $20,000 Exercise 9 When the AQR partnership was formed, partner Acre contributed land with a fair market value of $100,000 and a tax basis of $60,000 in exchange for a one-third interest in the partnership. The AQR partnership agreement specifies
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that each partner will share equally in the partnership's profits and losses. During its first year of operation, AQR sold the land to an unrelated third party for $160,000. What is the proper tax treatment of the sale? Each partner reports a capital gain of $33,333. The entire gain of $100,000 must be specifically allocated to Acre.
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  • Spring '17
  • Wendy Achiles
  • partner

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