Question 1

KBL,Inc.,AGW,Inc.,Blaster,Inc.,Shiny Shoes,Inc.,and a group of 24 individuals form Shoes Galore General Partnership on October 11,20X9.Now,Shoes Galore must adopt its required tax year-end.The partners' year-ends,profits interests,and capital interests are reflected in the table below.Given this information,what tax year-end must Shoes Galore use and what rule requires this year-end?

Accepted Answer

Shoes Galore must adopt a 1/31 year end ...

Question 2

Adjustments to a partner's outside basis are made annually to prevent double taxation on the sale of a partnership interest or at the time of a partnership distribution.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following items are subject to the Net Investment Income tax when a partner is not a material participant in the partnership?

Accepted Answer

A)   Partner's distributive share of dividends.
B)   Partner's distributive share of interest.
C)   Partner's distributive share of ordinary business income.
D)   All of the choices are correct.E) C) and D)
F) B) and D)

Question 4

How does a partnership make a tax election for the current year?

Accepted Answer

A)   Partnerships make certain elections automatically by simply filing their returns.
B)   Partnerships make certain tax elections by filing a separate form with the IRS.
C)   Partnerships do not need to file anything to make a tax election.
D)   Partnerships do not make tax elections. Partners must make tax elections separately.
E)   Both Partnerships make certain elections automatically by simply filing their returns and Partnerships make certain tax elections by filing a separate form with the IRS.F) A) and B)
G) A) and E)

Question 5

What is the difference between the aggregate and entity theory of partnership taxation? Provide two examples of how partnership tax rules reflect the aggregate theory and two examples of how they reflect the entity theory.

Accepted Answer

The aggregate theory treats a partnershi...

Question 6

Hilary had an outside basis in LTL,General Partnership of $10,000 at the beginning of the year.LTL reported the following items on Hilary's K-1 for the year: ordinary business income of $5,000,a $10,000 reduction in Hilary's share of partnership debt,a cash distribution of $20,000,and tax-exempt income of $3,000.What is Hilary's adjusted basis at the end of the year?

Accepted Answer

A)   ($12,000) .
B)   ($9,000) .
C)   $0.
D)   $15,000.
E)   $18,000.F) C) and D)
G) A) and B)

Exam 9: Forming and Operating Partnerships

Correct Answer
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Shoes Galore must adopt a 1/31 year end ...
View Answer

Correct Answer
verified

What is the difference between the aggregate and entity theory of partnership taxation? Provide two examples of how partnership tax rules reflect the aggregate theory and two examples of how they reflect the entity theory.

Correct Answer
verified
The aggregate theory treats a partnershi...
View Answer

Adjustments to a partner's outside basis are made annually to prevent double taxation on the sale of a partnership interest or at the time of a partnership distribution.

Correct Answer
verified

Which of the following items are subject to the Net Investment Income tax when a partner is not a material participant in the partnership?

Correct Answer
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How does a partnership make a tax election for the current year?

Correct Answer
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Exam 9: Forming and Operating Partnerships

Correct AnswerverifiedShoes Galore must adopt a 1/31 year end ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

What is the difference between the aggregate and entity theory of partnership taxation? Provide two examples of how partnership tax rules reflect the aggregate theory and two examples of how they reflect the entity theory.

Correct AnswerverifiedThe aggregate theory treats a partnershi...View AnswerShow Answer

Adjustments to a partner's outside basis are made annually to prevent double taxation on the sale of a partnership interest or at the time of a partnership distribution.

Correct AnswerverifiedShow Answer

Which of the following items are subject to the Net Investment Income tax when a partner is not a material participant in the partnership?

Correct AnswerverifiedShow Answer

How does a partnership make a tax election for the current year?

Correct AnswerverifiedShow Answer

Correct Answer
verified
Shoes Galore must adopt a 1/31 year end ...
View Answer

Correct Answer
verified

Correct Answer
verified
The aggregate theory treats a partnershi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified