Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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Question
Chapter 10, Problem 18MCQ
To determine
Introduction:
To choose: The situation in which the loss or gain from the transaction between partner and partnership is disallowed.
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Students have asked these similar questions
Which of the following statements is FALSE?
A. A basis adjustment under 734(b) attributable to a partnership distribution is designed to protect the partners who did not receive the distribution from recognizing built-in gains that belong to the distributee partner.
B. In order to determine the correct tax result for payments to a deceased or retired partner, one must first determine the retiring/deceased partner's share of the fair market value of partnership assets. Unrealized receivables are not considered an "asset" for this purpose if capital is not material income producing factor (such as a law firm).
C. Payments to a retiring partner that compensate the partner for his share of the fair market value of partnership property are treated as guaranteed payments.
D. All of the above statements are TRUE
In a transaction involving the transfer of corporate and partnership interests in which the special valuation rules under IRC Chapter 14 apply, which one of the following statements is CORRECT?
A)
The interest retained by the transferor must be valued at zero if this retained interest is not a qualified interest.
B)
The interest given to the transferee/recipient must be valued at zero if the transferee is not given a qualified interest.
C)
The interest retained by the transferor must be valued at zero if this retained interest is a qualified interest.
D)
The interest given to the transferee must be valued at zero if the transferee is given a qualified interest.
A loss from the sale or exchange of property will be disallowed in which of the following situations? a. A transaction between a partnership and a partner who owns 40 percent of the partnership capital b. A transaction between a partnership and a partner who has a 40 percent profit in-terest in the partnership c. A transaction between two partnerships owned 80 percent by the same partners d. A transaction between two partners with investments in the same partnership e. None of the above
Chapter 10 Solutions
Income Tax Fundamentals 2020
Ch. 10 - Which of the following may not be treated as a...Ch. 10 - Prob. 2MCQCh. 10 - Prob. 3MCQCh. 10 - Prob. 4MCQCh. 10 - Prob. 5MCQCh. 10 - Prob. 6MCQCh. 10 - Abigail contributes land with an adjusted basis of...Ch. 10 - Prob. 8MCQCh. 10 - Prob. 9MCQCh. 10 - Prob. 10MCQ
Ch. 10 - Prob. 11MCQCh. 10 - Prob. 12MCQCh. 10 - Prob. 13MCQCh. 10 - Prob. 14MCQCh. 10 - Prob. 15MCQCh. 10 - Prob. 16MCQCh. 10 - Kendra is an attorney and owns 60 percent of a law...Ch. 10 - Prob. 18MCQCh. 10 - In 2019, Gloria, a single taxpayer, receives a...Ch. 10 - Prob. 20MCQCh. 10 - Prob. 21MCQCh. 10 - Prob. 22MCQCh. 10 - Prob. 23MCQCh. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 9PCh. 10 - Prob. 10PCh. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 16P
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- In the liquidation of a limited liability partnership, a loan payable to a partner by the partnership is: a. Considered to be the same as the partner's capital account b. Paid before all outside creditors have been paid in full c. Considered to be zero. d. Used to absorb the partner's share of losses on realization of assetsarrow_forwardIRC Section 721 provides that, in general, no gain or loss is recognized by the partnership or the partner on the contribution of appreciated or depreciated property to a partnership in exchange for an interest in the partnership as long as the contributing partner(s) own at least 80 of the partnership. Group of answer choices True Falsearrow_forwardWhich of the following is an element of the requirement that partnership allocations must have substantial economic effect? If an allocation of income, loss, or deduction is made for tax purposes, a similar allocation must be made for partnership book purposes so the partner's capital account (and rights to partnership capital) reflect a corresponding increase or decrease. Liquidations must be made in accordance with partner's capital accounts and a partner with a negative capital account must have the obligation to restore the capital account deficit in case of liquidation. Even if corresponding allocations are made for tax purposes and book purposes, those allocations must be made for economic reasons independent of minimizing taxes based on the partners' individual tax situations. All of these are elements of substantial economic effectarrow_forward
- In the realization process for a partnership if an asset is sold for more than book value that is recorded in the accounting records, select the statement that correctly describes this transaction. O There is no journal entry required on the partnership's accounting records O There is a loss on realization O There is a gain on realization O none of the above answers What is the process called where a partnership sells the assets, pays the creditors, and distributes the remaining cash or other assets to the partners? O rearranging O liquidation O refinancing O none of the above answersarrow_forwardWhat is the proper disposition of a partnership loan that was made from a partner who has a debit balance in the capital account? A. The loan is ignored in liquidation. B. The loan is offset against the debit balance in the capital account. C. The loan is charged off to the capital accounts of all the partners in their profit and loss sharing ratios. D. The loan is held for payment after all other capital accounts are covered.arrow_forwardAn IPO of an UPREIT (Explain) a) Defers capital gains tax for the properties contributed to the Operating Partnership. b) Creates a non-publicly traded security that represents the property contributors’ residual ownership interest in the entity that owns the REIT’s properties. c) Does both (a) and (b). d) Does neither (a) nor (b).arrow_forward
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