Solved by verified expert :1136. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS, A
A property distribution from a partnership to a partner is generally taxable to
the partner.
a.
True
b. False
1137. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS, 2
For Federal income tax purposes, a distribution from a partnership to a partner
is treated the same as a distribution from a C corporation to its shareholders.
a.
True
b. False
1138. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS, 3
In a liquidating distribution, a partnership need not distribute all of its
property to all of its partners.
a.
True
b. False
1139. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS, 4
A distribution cannot be “proportionate” if only one partner receives assets
from the partnership.
a.
True
b. False
1140. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS, 5
For income tax purposes, proportionate and disproportionate distributions from
a partnership are treated similarly.
a.
True
b. False
1141. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS, 6
Generally, gain is recognized on a proportionate current or liquidating
distribution if the fair market value of property distributed exceeds the
partner’s basis in the partnership interest.
a.
True
b. False
1142. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS, 7
In a proportionate nonliquidating distribution of cash and a capital asset, the
partner recognizes gain to the extent the amount of cash distributed exceeds
the partner’s basis in the partnership interest.
a.
True
b. False
1143. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS, 8
In a proportionate nonliquidating distribution, cash is deemed to be
distributed first, followed by unrealized receivables and inventory and, last,
capital and other assets.
a.
True
b. False
1144. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS, 9
For purposes of determining gain on a current distribution to a partner, a
distribution of cash includes relief of a partner’s share of partnership liabilities
and certain distributions of marketable securities.
a.
True
b. False
1145. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS,10
The LMO Partnership distributed $30,000 cash to Emma in a proportionate,
nonliquidating distribution. Emma’s basis in her partnership interest was
$25,000 immediately before the distribution. As a result of the distribution,
Emma’s basis is reduced to $0 and she recognizes a $5,000 gain.
a.
True
b. False
1146. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS,11
Jared owns a 40% interest in the capital and profits of the JAJ Partnership.
Immediately before he receives a proportionate nonliquidating distribution from
JAJ, the basis of his partnership interest is $60,000. The distribution consists
of $40,000 in cash and land with a fair market value of $25,000. JAJ’s adjusted
basis in the land immediately before the distribution is $30,000. As a result
of the distribution, Jared recognizes no gain or loss and his basis in the land
is $20,000.
a.
True
b. False
1147. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS,12
Jeremy receives a proportionate nonliquidating distribution from the JKL
Partnership when the basis of his interest is $100,000. The distribution
consists of cash of $25,000, land with a basis of $30,000 and a fair market
value of $65,000, and inventory with a partnership basis of $50,000 and fair
market value of $60,000. As a result of this distribution, Jeremy recognizes a
$50,000 gain and takes a $65,000 basis in the land and a $60,000 basis in the
inventory.
a.
True
b. False
1148. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS,13
Shelby, a partner in the STU partnership, received a proportionate
nonliquidating distribution of $50,000 cash, unrealized receivables with a
basis of $0 and a fair market value of $40,000, and land with a basis of
$35,000 and a fair market value of $25,000. Her basis in the partnership
interest immediately before the distributions was $70,000. She will recognize
$0 gain on the distribution, and her basis in the receivables and land will be
$0 and $20,000 respectively.
a.
True
b. False
1149. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS,14
Matt, a partner in the MB Partnership, receives a proportionate, nonliquidating
distribution of property having a fair market value of $16,000 and a
partnership basis of $23,000. Matt’s basis in the partnership is $10,000 before
the distribution. In this situation, Matt will recognize a $6,000 gain, take a
$16,000 basis in the property, and his basis in the partnership interest is
reduced to zero.
a.
True
b. False
1150. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS,15
Tim and Darby are equal partners in the TD Partnership. Partnership income for
the year is $60,000. Tim needs cash in order to pay tax on his share of the
partnership income, but Darby wants to leave the cash in the partnership for
expansion. If the partners agree, it is acceptable for TD to distribute $8,000
to Tim, and no cash or other property to Darby.
a.
True
b. False
1151. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS,16
Marcie is a 40% member of the M&A LLC. Her basis is $40,000 immediately
before the LLC distributes to her $30,000 of cash and land (basis to the LLC of
$20,000 and fair market value of $25,000). As a result of the proportionate,
nonliquidating distribution, Marcie recognizes a gain of $15,000 and her basis
in the land equals its fair market value of $25,000.
a.
True
b. False
1152. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS,17
Pat is a 40% member of the P&J LLC. Her basis is $30,000 immediately before
the LLC distributes to her $40,000 of cash and land (basis to the partnership
of $25,000 and fair market value of $50,000). As a result of the proportionate
nonliquidating distribution, Pat recognizes a gain of $10,000 and her basis in
the land is $0.
a.
True
b. False
1153. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS,18
In a proportionate liquidating distribution, RST Partnership distributes to
partner Riley cash of $30,000, accounts receivable (basis of $0 and fair market
value of $40,000), and land (basis of $65,000 and fair market value of $50,000).
Riley’s basis was $40,000 before the distribution. On the liquidation, Riley
recognizes a gain of $0, and her basis is $10,000 in the land and $0 in the
accounts receivable.
a.
True
b. False
1154. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS,19
In a proportionate liquidating distribution, UVW Partnership distributes to
partner William cash of $25,000, accounts receivable (basis of $10,000 and fair
market value of $8,000), and land (basis of $50,000 and fair market value of
$60,000). William’s basis was $75,000 before the distribution. On the
liquidation, William recognizes no gain or loss, and he takes a basis of
$10,000 in the accounts receivable, and $50,000 in the land.
a.
True
b. False
1155. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS,20
Zach’s partnership interest basis is $80,000. Zach receives a proportionate,
liquidating distribution from a liquidating partnership of $60,000 cash and
inventory having a basis of $30,000 to the partnership and a fair market value
of $26,000. Zach assigns a basis of $20,000 to the inventory and recognizes no
gain or loss.
a.
True
b. False
1156. CHAPTER
11—PARTNERSHIPS: DISTRIBUTIONS, TRANSFER OF INTERESTS,21
Carlos receives a proportionate liquidating distribution consisting of $8,000
cash and inventory with a basis to the partnership of $5,000 and a fair market
value of $6,000. His basis in his partnership interest was $15,000 immediately
before the distribution. Carlos assigns a basis of $5,000 to the inventory, and
recognizes a $2,000 capital loss.
a.
True
b. False
