Question 1

On a corporate Form 1120, Schedule M-1 (or M-3) is used to reconcile book and tax income, and Schedule M-2 reconciles retained earnings to the amounts shown on Schedule L.How are these reconciliations accomplished on a partnership return? What additional information must be provided?

Accepted Answer

The answer of On a corporate Form 1120, Schedule M-1...

Question 2

Match each of the following statements with the terms below that provide the best definition.
-Startup costs

Accepted Answer

Startup costs refer to the expenses incurred after a business entity is formed but before it actually begins its operations.

Question 3

Match each of the following statements with the terms below that provide the best definition.
-Substituted

Accepted Answer

The answer of Match each of the following statements with...

Question 4

Harry and Sally are considering forming a partnership.Both taxpayers use the calendar year and are cash basis taxpayers.The partnership will not be a tax shelter.The partners are uncertain as to whether the partnership should use the cash or accrual method of accounting.Moreover, the idea of a tax deferral in the first year of operations has led them to consider using a June 30 fiscal year-end for the partnership.
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As their tax adviser, identify the issues that must be considered in selecting an accounting method and tax year for the partnership.

Accepted Answer

The answer of Harry and Sally are considering forming a...

Question 5

Match each of the following statements with the terms below that provide the best definition.
-Organizational costs

Accepted Answer

The answer of Match each of the following statements with...

Question 6

Match each of the following statements with the terms below that provide the best definition.
-Syndication costs

Accepted Answer

Syndication costs refer to the expenses associated with promoting and marketing partnership interests, such as brokerage and registration fees.

Question 7

Match each of the following statements with the terms below that provide the best definition.
-General partnership

Accepted Answer

The answer of Match each of the following statements with...

Question 8

Match each of the following statements with the terms below that provide the best definition.
-Carryover

Accepted Answer

The answer of Match each of the following statements with...

Question 9

Match each of the following statements with the terms below that provide the best definition.
-Limited liability company

Accepted Answer

Limited Liability Companies (LLCs) are known for having owners referred to as "members," distinguishing them from corporations (which have shareholders) and partnerships (which have partners).

Question 10

Match each of the following statements with the terms below that provide the best definition.
-Separately stated item

Accepted Answer

The answer of Match each of the following statements with...

Question 11

Match each of the following statements with the terms below that provide the best definition.
-Check the box regulations

Accepted Answer

The answer of Match each of the following statements with...

Question 12

Match each of the following statements with the terms below that provide the best definition.
-Limited liability partnership

Accepted Answer

The answer of Match each of the following statements with...

Question 13

Match each of the following statements with the terms below that provide the best definition.
-Disguised sale

Accepted Answer

Disguised sales involve transactions where a partner contributes an asset to a partnership and then receives a distribution of cash or other consideration soon after, which can be treated as a sale for tax purposes, rather than a simple contribution and distribution.

Question 14

Match each of the following statements with the terms below that provide the best definition.
-Profits interest

Accepted Answer

The answer of Match each of the following statements with...

Question 15

Match each of the following statements with the terms below that provide the best definition.
-Limited partnership

Accepted Answer

Limited partnerships must have at least one general partner, who has unlimited liability, and one or more limited partners, who have liability limited to the amount of their investment.

Question 16

Match each of the following statements with the terms below that provide the best definition.
-Entity concept

Accepted Answer

The entity concept in accounting refers to the theory that treats the partner and partnership as separate economic units, distinguishing between the personal finances of the partners and the financial affairs of the partnership itself.

Question 17

What is the difference between a partner's basis in the partnership interest and a partner's § 704(b) book capital account? What are the purposes of these two amounts? Why are these amounts typically different?

Accepted Answer

The answer of What is the difference between a partner's...

Question 18

Match each of the following statements with the terms below that provide the best definition.
-Required taxable year

Accepted Answer

The answer of Match each of the following statements with...

Question 19

If a partnership earns tax-exempt income, the income should not affect the partners' bases in their partnership interests.Do you agree with this statement? Explain.

Accepted Answer

The answer of If a partnership earns tax-exempt income, the...

Question 20

Match each of the following statements with the terms below that provide the best definition.
-Aggregate concept

Accepted Answer

The aggregate concept views the partnership as a collection of individual taxpayers in an agency relationship, rather than as a separate entity.

Quiz 14: Partnerships and Limited Liability Entities

On a corporate Form 1120, Schedule M-1 (or M-3) is used to reconcile book and tax income, and Schedule M-2 reconciles retained earnings to the amounts shown on Schedule L.How are these reconciliations accomplished on a partnership return? What additional information must be provided?

Match each of the following statements with the terms below that provide the best definition. -Startup costs

Match each of the following statements with the terms below that provide the best definition. -Substituted

Match each of the following statements with the terms below that provide the best definition. -Organizational costs

Match each of the following statements with the terms below that provide the best definition. -Syndication costs

Match each of the following statements with the terms below that provide the best definition. -General partnership

Match each of the following statements with the terms below that provide the best definition. -Carryover

Match each of the following statements with the terms below that provide the best definition. -Limited liability company

Match each of the following statements with the terms below that provide the best definition. -Separately stated item

Match each of the following statements with the terms below that provide the best definition. -Check the box regulations

Match each of the following statements with the terms below that provide the best definition. -Limited liability partnership

Match each of the following statements with the terms below that provide the best definition. -Disguised sale

Match each of the following statements with the terms below that provide the best definition. -Profits interest

Match each of the following statements with the terms below that provide the best definition. -Limited partnership

Match each of the following statements with the terms below that provide the best definition. -Entity concept

What is the difference between a partner's basis in the partnership interest and a partner's § 704(b) book capital account? What are the purposes of these two amounts? Why are these amounts typically different?

Match each of the following statements with the terms below that provide the best definition. -Required taxable year

If a partnership earns tax-exempt income, the income should not affect the partners' bases in their partnership interests.Do you agree with this statement? Explain.

Match each of the following statements with the terms below that provide the best definition. -Aggregate concept