EA2 Study Unit 10 Partnership Operations

<p>Decrease by the amount of the distribution (B)</p> Signup and view all the answers

<p>When the partnership liabilities allocable to the gifted interest exceed the adjusted basis of the partnership interest. (A)</p> Signup and view all the answers

<p>The fair market value (FMV) of the interest immediately prior to the gift (C)</p> Signup and view all the answers

<p>The initial basis plus the amount of the contribution (A)</p> Signup and view all the answers

<p>When the partnership incurs expenditures treated as deductions for federal income tax purposes (D)</p> Signup and view all the answers

<p>Because they are not deductible from partnership ordinary income (C)</p> Signup and view all the answers

<p>On a daily basis, reflecting the constant and variable nature of partnership operations. (A)</p> Signup and view all the answers

<p>Methods of accounting (C)</p> Signup and view all the answers

<p>Taxable income earned by the partner outside the partnership (D)</p> Signup and view all the answers

<p>Partnership elections generally apply equally to all partners and do not affect non-partnership interests. (C)</p> Signup and view all the answers

<p>Through a flow-through entity, reporting income and separately stated items. (B)</p> Signup and view all the answers

<p>Distributions are generally received tax-free, while income and loss are passed through. (B)</p> Signup and view all the answers

<p>It can recharacterize capital gains into ordinary income for a partner receiving a distribution. (A)</p> Signup and view all the answers

<p>Fluctuations directly affect partner bases, increasing or decreasing them based on changes. (B)</p> Signup and view all the answers

<p>It determines if the partnership can claim a tax deduction for the payment. (C)</p> Signup and view all the answers

<p>They can trigger ordinary income for a partner receiving a distribution, even of money. (B)</p> Signup and view all the answers

<p>To prevent partners from claiming excessive losses and avoiding taxes. (C)</p> Signup and view all the answers

<p>money and the adjusted basis of property distributed to the partner. (D)</p> Signup and view all the answers

<p>First, the decrease is allocated to the assets with the largest declines in fair market value; then any remaining decrease is allocated proportionally to the partners' adjusted bases. (C)</p> Signup and view all the answers

<p>Transactions should be treated as if they were between two unrelated parties at arm's length. (B)</p> Signup and view all the answers

<p>The partner's basis is reduced by the adjusted basis of the assets received. (A)</p> Signup and view all the answers

<p>The adjusted basis of the property in the partnership's hands at the time of distribution. (B)</p> Signup and view all the answers

<p>All of the above. (D)</p> Signup and view all the answers

<p>basis, increased (A)</p> Signup and view all the answers

<p>The creditor has no claim against the partnership or any partners. (D)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>Section 1231 gains and losses = Gains and losses from the sale or exchange of capital assets. Guaranteed payments = Payments to a partner for services or for the use of capital that are determined without regard to the income of the partnership. Interest and dividend income = Income received from investments. Net short- and long-term capital gain or loss = Gains and losses from the sale or exchange of capital assets. Royalties = Payments for the right to use property, such as oil or gas. Tax-exempt income and related expenses = Income that is not subject to federal income tax. Investment income and related expenses = Income and expenses related to investments. Rental activities, portfolio income, and related expenses = Income and expenses related to rental property. Recovery items = Previously deducted expenses that are recovered later. Charitable contributions = Donations to qualified charitable organizations. Foreign income taxes paid or accrued = Taxes paid to foreign countries. Depletion on oil and gas wells = Deduction for the decline in value of oil and gas wells due to extraction. Section 179 deductions = Deduction for the cost of certain tangible property in the year it is placed into service. Distributions = Payments made from the partnership to the partner. Qualified items of income, gain, and loss for QBI deduction = Income, gain, or loss that is deductible for the qualified business income deduction.</p> Signup and view all the answers

<p>partnership agreement (B)</p> Signup and view all the answers

<p>True (B)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>$289,000 Single and $578,000 (MFJ) (C)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>A current distribution reduces a partner's basis in the partnership interest (A)</p> Signup and view all the answers

<p>The excess of the FMV over the partnership's adjusted basis in the inventory subject to a 120% limitation. (B)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

Partnerships must file their tax return 2 1/2 months after the fiscal year ends.

A fiscal year is a one-year period that companies use for financial reporting and budgeting.

A tax return is a form filed with a tax authority reporting income, expenses, and other tax information.

Partnerships have specific rules about when they need to file returns, compared to individuals or corporations.

Meeting the deadline is crucial to avoid penalties and interest charges on unpaid taxes.

The calculation of a partner's basis in their partnership interest considering capital contributions, income, and liabilities.

Payments to partners that are deducted from partnership income and do not adjust the partner's basis.

A donor recognizes gain on a gifted partnership interest when liabilities exceed the adjusted basis.

A donee uses the fair market value (FMV) immediately prior to a gift to calculate gain or loss on sale.

A partnership must file an initial return in its first year of income or deductible expenditures.

A partner recognizes gain on money distribution only if it exceeds the adjusted basis immediately before the distribution.

Partners do not recognize a loss when receiving money from a partnership distribution.

A partner's basis is reduced by the cash and adjusted basis of property received in a distribution.

A partnership is a business owned by two or more persons for profit, not a corporation, trust, or estate.

A partnership reports taxable income or loss that flows through to individual partners for tax purposes.

A partner’s portion of a partnership’s taxable income or loss that affects personal tax liability.

Items taxed currently to partners, not individually classified, along with separate items on tax returns.

Fluctuations in partnership debt that can affect partners' bases and treatment of distributions.

Gains recognized when a partner contributes assets to a partnership and can trigger capital gain recognition.

Distributions from a partnership are generally received without tax implications for partners.

Distributive shares in a partnership must be apportioned daily if interest size varies.

Elections made at partnership level include methods of accounting and depreciation.

Partners make elections like foreign tax credit on their individual returns.

Partner's basis is adjusted yearly for contributions, income, liabilities, and distributions.

Partner's basis is affected by changes in interest due to sales, purchases, or liquidation.

The total amount a partner contributes to the partnership, including cash and property.

The amount by which the total partnership basis is reduced.

Fair Market Value decline indicates a decrease in asset value within the partnership.

Basis allocated to partners based on their proportionate share after adjustments.

The duration a partner holds the distributed property, including partnership time.

The partner's ownership interest basis is decreased by distributions received.

Services a partner provides that are typical for their role, compensated as income.

Payments to partners that are treated as income for services rendered, deducted from profits.

Partnership must increase ordinary income by $16,000 due to separate accounting for certain items.

Partnership losses allocated based on contribution ratios until agreement changes.

Property classification affects gain/loss character; inventory retains ordinary income status.

A partner can deduct a loss only up to their adjusted basis in the partnership.

Adjusted basis includes cash withdrawals plus share of income minus losses.

Rental activity losses are typically passive and cannot offset active income unless AGI limits are met.

Partners report share of partnership income for any year the partnership's fiscal year ends.

Generally, no gain recognized when a partner receives property they contributed back from partnership.

Guaranteed payments are included as ordinary income in the partner's return in the year on which partnership's tax year ends.

Losses on sales between related partnerships are not deductible.

Partners can use profits in a subsequent year to gain basis and report previous losses.

Guaranteed payments ensure minimum income for partners based on partnerships agreements.

A partner's basis is decreased by the amount of cash and adjusted basis of property received.

If a property loss isn't recognized in prior transactions through disallowed losses, it cannot affect future sales' gain.

Interest-free loans from a partnership to a partner are not counted as income.

A partner's income tax reporting aligns with the fiscal year end of the partnership.

Property contributed by partners can lead to limited gain recognitions or loss limitations.

Ordinary income reported must include total partnership income minus allowances like guaranteed payments.

For a partnership sale, recognize gains only beyond previously disallowed losses.

Guaranteed payments affect a partner's basis by being calculated on partnership's income independently.

A partner can only recognize losses up to their adjusted basis at the tax year's end.

Partners must report ordinary income from partnerships after obligatory deductions for expenses.

Partnerships have specific deadlines for filing tax returns based on fiscal or calendar years.

A partner’s basis is adjusted every year based upon various income/loss impacts and distributions.

Guarantee payments included in partner's income are indicative of partnership commitment before profits.

Partnership income directly affects a partner’s taxes through distributive shares.

Guaranteed payments may not lead to losses on partnership tax returns.