Reference no: EM133335443

Assignment:

Question 1. Which of the following items is generally reported separately on a partnership return?

• Ordinary income from the company's business operations
• bonus depreciation
• Interest expense on trade debts
• Net rental income
• Factory rental costs

Question 2. Joe, Ben, and Melissa are members of the Collins Partnership. All three use a year-end calendar for their individual taxes. The Collins Partnership end of year is likely to be:

• October 31 as that is only three months before the end of the calendar year
• The end of any month during the year.
• January 31 but only if Collins Partnership's accounting year-end is January 31
• December 31
• None of the above

Question 3. Kendra is a lawyer and owns 60 percent of a law firm. Kendra sells land to the partnership for $50,000 in the current tax year. She bought the land for $100,000 eight years ago when real estate prices were at their peak. How much gain or loss should Kendra recognize on the sale of the land to the partnership?

• no profit or loss
• Loss of $30,000
• loss of $50,000
• $50,000 short-term capital loss, limited to $3,000 allowed per year

Question 4. In which of the following situations will a loss on the sale or exchange of property be disallowed?

• A transaction between a partnership and a partner who owns 40 percent of the partnership's capital
• A transaction between a partnership and a partner who has a 40 percent share of the partnership's profits.
• A transaction between two partnerships owned 40 percent by the same partners
• A transaction between two partners with investments in the same partnership
• None of the above

Question 5. Which of the following correctly describes a difference between a partnership and an LLC?

• Partnerships pass on income and losses to partners, while LLCs typically pay an entity-level tax and owners pay tax on distributions.
• Partners are often personally liable for the partnership's debts, while LLC members are not liable for the LLC's debt.
• Partnerships can have only one partner, but LLCs must have more than one member.
• The tax attributes of income in a partnership are preserved when included in partner income, but LLC income is treated as capital income in all cases.