Reference no: EM131206422
1. Which of the following decreases a partner’s basis in the partner’s partnership interest?
a. Additional contributions the partner makes during the year
b. The partner’s allocable share of tax-exempt income
c. The partner’s allocable share of partnership items of income and gain
d. Cash distributions to the partner during the year
2. Jim, one of two equal partners of the JJ Partnership, a general partnership, contributed business property with an adjusted basis to him of $15,000 and a fair market value of $10,000 to the JJ Partnership. Jim’s capital account was credited with $10,000. The property later was sold for $12,000. As a result of this sale, how much gain or loss must Jim report on his personal income tax return?
a. $1,000 gain
b. $1,500 loss
c. $2,000 gain
d. $3,000 loss
3. Ronald and Roy formed an equal partnership, R&R Partnership, a general partnership, on January 1, 2011. Ronald contributed $100,000 in exchange for his one-half interest in R&R partnership. Roy contributed land worth $100,000 and with an adjusted basis to Roy of $30,000 in exchange for his one-half interest in the partnership. Roy is a real estate developer, and at the time of the contribution, the land was inventory in his hands. The land is a capital asset in the hands of R&R Partnership. If R&R Partnership sells the land in 2017 to an unrelated taxpayer for $180,000,how much gain will be recognized by R&R Partnership and what will be the character of the gain?
a. $80,000, all of which gain will be ordinary income
b. $150,000,all of which gain will be capital gain
c. $150,000,all of which gain will be ordinary income
d. $150,000, consisting of $80,000 capital gain and $70,000 ordinary income
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