Exam w answers
1. Which, if either, of the following statements is or are true? I. The co-ownership of business property, where only minimal services are provided by the owners for their tenants, generally constitutes a partnership for federal income tax purposes. II. As a general rule, when a person obtains an interest in partnership capital through rendition of services, compensation (ordinary) income is recognized to the extent of the fair market value of the interest received. a. I only.
b. II only.
c. Both I and II.
d. Neither I nor II.
2. Which, if either, of the following statements is or are true? I. On the formation of a partnership, the contribution by one partner of encumbered property to a partnership when other partners contribute only cash will not result in taxation unless the total amount of the debt relief exceeds the contributor’s basis in the contributed property. II. The contribution of accounts receivable to a partnership results in immediate taxation to the contributor to the extent of the fair market value of the receivables on date of contribution. a. I only. b. II only. c. Both I and II. d. Neither I nor II. 3. Under the check-the-box regulations a corporation incorporated under the law of any state can a. elect to be taxed as a partnership
b. elect to be taxed as a limited liability company
c. elect to be taxed as a sole proprietor if there is only one shareholder
d. not be taxed as anything other than a corporation
4. On January 2, 2013, Henry, Cabot, and Lodge formed a three-person equal partnership with Henry and Cabot each contributing $100,000 and Lodge contributing securities with a basis to him of $60,000 and a fair market value of $100,000. On February 28, 2013, the partnership sold the securities for $130,000. The amount of the gain to be allocated to Lodge is: a. $70,000
b. $50,000
c. $30,000
d. $23,333
e. $10,000
5. Malcolm, a dealer in securities, is a 60
b. II only.
c. Both I and II.
d. Neither I nor II.
2. Which, if either, of the following statements is or are true? I. On the formation of a partnership, the contribution by one partner of encumbered property to a partnership when other partners contribute only cash will not result in taxation unless the total amount of the debt relief exceeds the contributor’s basis in the contributed property. II. The contribution of accounts receivable to a partnership results in immediate taxation to the contributor to the extent of the fair market value of the receivables on date of contribution. a. I only. b. II only. c. Both I and II. d. Neither I nor II. 3. Under the check-the-box regulations a corporation incorporated under the law of any state can a. elect to be taxed as a partnership
b. elect to be taxed as a limited liability company
c. elect to be taxed as a sole proprietor if there is only one shareholder
d. not be taxed as anything other than a corporation
4. On January 2, 2013, Henry, Cabot, and Lodge formed a three-person equal partnership with Henry and Cabot each contributing $100,000 and Lodge contributing securities with a basis to him of $60,000 and a fair market value of $100,000. On February 28, 2013, the partnership sold the securities for $130,000. The amount of the gain to be allocated to Lodge is: a. $70,000
b. $50,000
c. $30,000
d. $23,333
e. $10,000
5. Malcolm, a dealer in securities, is a 60