Question 1

Martha Stuart is one of four partners in the Homemaker Partnership (HP). During the current year, Martha contributes a tract of land to the partnership. Martha acquired the land for $59,400 and, at the time of transfer, it is valued at $180,000. Martha does not use a rollover provision to make the transfer. Describe the tax consequences to Martha and HP in the following three situations:
A. No consideration is received from HP.
B. Martha receives $45,000 in cash from HP on the transfer.
C. Martha receives $201,600 in cash from HP on the transfer.

Accepted Answer

The answer of Martha Stuart is one of four partners...

Question 2

Ethan Allen is one of three partners in the Colonial Partnership (CP). During 2020, Ethan transfers land to the partnership. The partners agree that the land has a fair market value of $220,000. Ethan's adjusted cost base for the land is $100,000. Describe the tax consequences to Ethan and CP in the following three situations:
A. No consideration is received from CP.
B. Ethan receives $60,000 in cash from CP on the transfer.
C. Ethan receives $250,000 in cash from CP on the transfer.

Accepted Answer

The answer of Ethan Allen is one of three partners...

Question 3

The XL Partnership is formed on January 1, 2020. Xena is entitled to 60 percent of the Partnership income, while Larry is entitled to the remaining 40 percent.
Xena's original investment is $125,000. Later in 2020, she makes a further contribution of $75,000. Also during 2020, she withdraws $40,000 in anticipation of the Partnership profits.
During the taxation year ending December 31, 2020, the XL Partnership has the following sources of income:  Determine the adjusted cost base of Xena's partnership interest on December 31, 2020, and at January 1, 2021. In addition, determine the amount that would be included in Xena's 2020 Net Income For Tax Purposes as a consequence of her interest in the XL Partnership.

Accepted Answer

The answer of The XL Partnership is formed on January...

Question 4

Early in 2020, Bobby Joe Hyder purchased an interest in a limited partnership for $450,000. Of this amount $250,000 is paid in cash, with the remainder payable on January 1, 2023. If Bobby Joe transfers his interest to the general partner prior to January 1, 2023, the general partner will pay him $100,000 and assume full responsibility for the balance due on January 1, 2023.
For 2020, the limited partnership has allocated losses of $132,000 to Bobby Joe. How much of this loss is Bobby Joe entitled to claim as a deduction on his 2020 tax return? What is the amount of his limited partnership loss at the end of 2020?

Accepted Answer

The answer of Early in 2020, Bobby Joe Hyder purchased...

Question 5

Jerry and Joan are equal partners in the JJ Partnership. On January 1, 2020, the balance in each of their capital accounts is $210,000. This is also the adjusted cost base of their partnership interests. On this date, John is admitted as an equal partner, paying $130,000 to each of Jerry and Joan. Calculate the tax effects of the partner admission for Jerry and Joan. In addition, determine the capital account balances and adjusted cost base for each partner after the admission of John.

Accepted Answer

The answer of Jerry and Joan are equal partners in...

Question 6

Sol Marinara is one of four equal partners in the MSG Partnership. During the current year, Sol transfers land to the partnership as a capital contribution. He had acquired the land several years ago for $146,000. At the time of transfer, it is valued at $472,000. He would like to use any available rollover provision in order to minimize his current taxes. Assuming the appropriate rollover provision is used, what are the tax consequences of this transfer?

Accepted Answer

The answer of Sol Marinara is one of four equal...

Question 7

On January 1, 2020, Rachel and Roberta form the Racherta Partnership. The partnership agreement provides Roberta with a 40 percent share of profits and losses. Roberta initially contributes $52,500 and makes a further contribution of $30,240 on May 15, 2020. She withdraws $16,800 on August 31, 2020. The Racherta Partnership has the following sources of income for the year ending December 31, 2020:  Determine the adjusted cost base of Roberta's partnership interest on December 31, 2020, and at January 1, 2021. In addition, determine the amount that would be included in Roberta's 2020 Net Income For Tax Purposes as a consequence of her interest in the Racherta Partnership.

Accepted Answer

The answer of On January 1, 2020, Rachel and Roberta...

Question 8

For the taxation year ending December 31, 2020, the Barton Partnership has an accounting Net Income of $242,000. In determining this figure, no deductions were made for either partner salaries or interest on partner capital contributions. However, the figure does include $14,000 in eligible dividends received and a capital gain on the sale of investments of $52,000.
The partnership has two members, Sam Barton and Sherri Barton. All income is allocated on the basis of 40 percent to Sam and 60 percent to Sherri.
Determine the amounts that will be included in the Net Income For Tax Purposes of Sam Barton and Sherri Barton for the year ending December 31, 2020.

Accepted Answer

The answer of For the taxation year ending December 31,...

Question 9

Match between columns
                        Premises: Canadian Partnership
At-Risk Amount
Partner
Limited Liability Partnership
Partnership Interest
General Partner
Limited Partnership
Limited Partnership Loss

Accepted Answer

The Answer of A partner whose personal liability for the is...

Question 10

During 2020, Blake Robson acquires an interest in a real estate limited partnership for $235,000, consisting of a cash payment of $62,000 along with the assumption of a loan of $173,000. The loan is payable in six years. The general partner has agreed to purchase Blake's interest at any time, returning his $62,000 payment and assuming full responsibility for the loan, without regard to the current value of the interest. For 2020, the limited partnership has allocated losses of $81,400 to Blake. How much of this loss is Blake entitled to claim as a deduction on his 2020 tax return? What is the amount of his limited partnership loss at the end of 2020?

Accepted Answer

The answer of During 2020, Blake Robson acquires an interest...

Question 11

Natasha and Felicia are equal partners in the Natty Partnership. On April 30, 2020, Natasha and Felicia's partnership capital account balances are $148,800 each. This amount is also equal to the adjusted cost base of their partnership interests. Kyra is admitted as an equal partner on April 30, 2020, and pays $124,000 to each of Natasha and Felicia. Calculate the tax effects of the partner admission for Natasha and Felicia and determine the capital account balances and adjusted cost base for each partner after the admission of Kyra.

Accepted Answer

The answer of Natasha and Felicia are equal partners in...

Question 12

Match between columns
                        Premises: Partner
General Partner
Partnership Interest
Limited Partnership
At-Risk Amount
Canadian Partnership
Limited Partnership Loss
Limited Liability Partnership

Accepted Answer

The Answer of A partnership, all of the members of is...

Question 13

Lamar is one of 10 equal partners in the Trident Partnership. During the taxation year ending December 31, 2020, Trident distributes debenture bonds that were held for investment purposes to each of the partners. These bonds have an adjusted cost base of $567,750 and, at the time of transfer, they have a fair market value of $611,750. Lamar receives 10 percent of these bonds. At the time of the transfer, the adjusted cost base of Lamar's partnership interest is $75,800. What are the tax consequences to Trident and Lamar with respect to this distribution? Your answer should include the adjusted cost base of Lamar's partnership interest on both December 31, 2020 and January 1, 2021.

Accepted Answer

The answer of Lamar is one of 10 equal partners...

Question 14

For the year ending December 31, 2020, the PU Partnership has correctly computed its Net Business Income to be $213,000. The partnership agreement calls for all allocations to Partner P and Partner U to be on a 40:60 basis. Partner P and U are both individuals and neither has Taxable Income that will be taxed federally at 33 percent.
In determining the Net Business Income amount, the partnership's accountant added back $4,200 in charitable donations and $900 in contributions to a registered political party. In addition, $2,700 in eligible dividends received were deducted. The partners have made no charitable donations or political contributions as individuals.
Determine the amount of any tax credits that will be allocated to Partner P and Partner U for the year ending December 31, 2020.

Accepted Answer

The answer of For the year ending December 31, 2020,...

Question 15

The Coop Partnership has two members, John and Jill Walther, who share all income on a 60:40 basis. Neither partner has Taxable Income that will be taxed federally at 33 percent.
During the year ending December 31, 2020, accounting income has been computed as $346,000. This accounting figure includes the following items:  The partners have made no charitable donations or political contributions as individuals.
Determine the amount of any tax credits that will be allocated to John and Jill Walther for the year ending December 31, 2020.

Accepted Answer

The answer of The Coop Partnership has two members, John...

Question 16

Patricia Flood holds a 25 interest in the Markham Partnership. The Partnership holds securities with an adjusted cost base of $250,000 and a fair market value of $475,000. During the taxation year ending December 31, 2020, the Partnership has decided to distribute these securities to the partners in proportion to their interests. Patricia receives 25 percent of these securities and, at the time that they are received, the adjusted cost base of her partnership interest is $180,000. What are the tax consequences to Patricia and Markham with respect to this distribution? Your answer should include the adjusted cost base of Patricia's partnership interest on both December 31, 2020 and January 1, 2021.

Accepted Answer

The answer of Patricia Flood holds a 25 interest in...

Quiz 18: Partnerships

For each of the key terms listed, indicate the BEST definition of that term, or that none of the definitions apply.

For each of the key terms listed, indicate the BEST definition of that term, or that none of the definitions apply.