FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 10: Dispositions of Partnership Interests and Partnership Distributions

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following assets would not be classified as hot assets?

A) Inventory.
B) Depreciation recapture.
C) Cash.
D) Accounts receivable for a cash method taxpayer.

E) A) and D)
F) C) and D)

Correct Answer

verified

Show Answer

Question 52

Short Answer

Review LaterAdd Note

Review Later

Lola is a 35% partner in the LW Partnership. On January 1, LW distributes $39,000 cash to Lola in complete liquidation of her partnership interest. LW has only capital assets and no liabilities at the date of the distribution. Lola's basis in LW is $50,000. What is the amount and character of Lola's gain or loss?

Correct Answer

verified

$11,000 capital loss.
Explanat...

View Answer

Show Answer

Question 53

Multiple Choice

Review LaterAdd Note

Kathy is a 25% partner in the KDP Partnership and receives a parcel of land with a fair value of $150,000 (inside basis of $100,000) in complete liquidation of her partnership interest. Kathy's outside basis immediately before the distribution is $200,000. KDP currently has a §754 election in effect and has no hot assets or liabilities. What is KDP's special basis adjustment from the distribution?

Marcella has a $65,000 basis in her 50% partnership interest in the JM Partnership before receiving any distributions. This year JM makes a proportionate current distribution to Marcella of $10,000 cash and inventory with an $80,000 fair value and a $40,000 basis to JM. What is Marcella's basis in the inventory and her remaining basis in JM after the distribution?

Jessica is a 25% partner in the JRL Partnership. On January 1, JRL distributes $40,000 cash to Jessica. JRL has no hot assets or liabilities at the date of the distribution. Jessica's basis in JRL is $28,000. What is the amount and character of Jessica's gain or loss from the distribution?

Doris owns a 1/3 capital and profits interest in the calendar-year DB Partnership. Her adjusted basis for her partnership interest on July 1 of the current year is $20,000. On that date, she receives an operating distribution of her share of partnership assets shown below: What is the amount and character of Doris' gain or loss on the distribution? What is her basis in the distributed assets? $\begin{array} { | l | r | r | } \hline & \text { Partnership's Basis in } & \text { Assets Fairmarket } \\&\text { Asset } & \text { Value } \\\hline \text { Cash } & \$ 81,000 & \$ 81,000 \\\hline \text { Inventory } & 36,000 & 24,000 \\\hline \text { Land } & 120,000 & 135,000 \\\hline\end{array}$

A partner's debt relief from the sale of a partnership interest will decrease his outside basis. Any debt relief increases the amount realized from the sale.

Daniela is a 25% partner in the JRD Partnership. On January 1, JRD makes a liquidating distribution of $16,000 cash, inventory with a $16,000 fair value (inside basis $8,000) , and accounts receivable with a fair value of $8,000 (inside basis of $12,000) to Daniela. JRD has no liabilities at the date of the distribution. Daniela's basis in JRD is $20,000. What is the amount and character of Daniela's gain or loss from the distribution?

Operating distributions terminate a partner's interest in the partnership.

Brian is a 25% partner in the BC Partnership. On January 1, BC distributes $20,000 cash and land with a $16,000 fair value (inside basis $8,000) to Brian. BC has no liabilities at the date of the distribution. Brian's basis in BC is $16,000. What is the amount and character of Brian's gain or loss on the distribution?

Scott is a 50% partner in the LS Partnership. Scott has a basis in his partnership interest of $84,000 at the end of the current year, prior to any distribution. On December 31, Scott receives an operating distribution of $9,000 cash and a parcel of land with a $21,000 fair market value and a $12,000 basis to the partnership. LS has no debt or hot assets. What is the amount and character of Scott's recognized gain or loss? What is Scott's basis in the distributed property? What is Scott's ending basis in his partnership interest?

Unrealized receivables include accounts receivable for which of the following partnerships?

The VRX Partnership (a calendar year-end entity) has the following assets and no liabilities: The equipment was purchased for $360,000 and VRX has taken $90,000 of depreciation. The stock was purchased 7 years ago. What are VRX's hot assets for purposes of a sale of partnership interest?

Marty is a 40% owner of MB Partnership. Marty has decided to sell his interest in the business to Emilio for $100,000 cash plus the assumption of his share of MB's liabilities. Assume Marty's inside and outside basis in MB are equal. MB shows the following balance sheet as of the sale date: $\begin{array} { | l | r | r | } \hline \text { Assets: } & \text { Basis } & \text { FMV } \\\hline \text { Cash } & \$ 160,000 & \$ 160,000 \\\hline \text { Receivables } & 50,000 & 50,000 \\\hline \text { Inventory } & 80,000 & 170,000 \\\hline \text { Land held for investment } & 60,000 & 40,000 \\\hline \text { Total } & \$ 350,000 & \$ 420,000 \\\hline\end{array}$ What is the amount and character of Marty's recognized gain or loss?

Which of the following statements regarding the sale of a partnership interest is false?

A partner that receives cash in an operating distribution recognizes loss if the cash distributed is less than the partner's outside basis in the partnership immediately before the distribution.

The purpose of hot asset rules is to ensure that selling partners recognize all gain or loss on the sale of their partnership interests as capital.

Daniela is a 25% partner in the JRD Partnership. On January 1, JRD distributes $16,000 cash, inventory with a $16,000 fair value (inside basis $8,000) , and accounts receivable with a fair value of $8,000 (inside basis of $12,000) to Daniela. JRD has no liabilities at the date of the distribution. Daniela's basis in JRD is $20,000. What is Daniela's basis in the distributed inventory and accounts receivable?

Which of the following statements regarding hot assets for purposes of disproportionate distributions is false?