19. Daniela is a 25% partner in the JRD Partnership. On January 1, JRD distribut

Question

19. Daniela is a 25% partner in the JRD Partnership. On January 1, JRD distributes $19,000 cash, inventory with a $17,200 fair value (inside basis $8,600), and accounts receivable with a fair value of $9,500 (inside basis of $0) to Daniela. JRD has no liabilities at the date of the distribution. Daniela's basis in JRD is $22,000. What is Daniela's basis in the distributed inventory and accounts receivable?

$8,600 inventory, $0 accounts receivable

$6,900 inventory, $3,900 accounts receivable

$3,000 inventory, $0 accounts receivable

$17,200 inventory, $9,500 accounts receivable

20. The PW partnership's balance sheet includes the following assets immediately before it liquidates:

In complete liquidation PW distributes the cash to Pamela and the unrealized receivables to Wade (equal partners). Pamela and Wade each have an outside basis in PW equal to $9,000. PW has no liabilities at the time of the liquidation. What is the amount and character of Wade's recognized gain or loss?

$0

$9,000 capital gain

$9,000 ordinary income

$4,500 capital gain and $4,500 ordinary income

21. Kathy is a 25% partner in the KDP Partnership and receives a parcel of land with a fair value of $162,000 (inside basis of $124,000) in complete liquidation of her partnership interest. Kathy's outside basis immediately before the distribution is $212,000. KDP currently has a §754 election in effect and has no hot assets or liabilities. What is KDP's special basis adjustment from the distribution?

$0

$38,000 step up

$88,000 step up

$88,000 step down

22. Kathy purchases a one-third interest in the KDP Partnership from Paul for $67,000. Just prior to the sale, Paul's outside and inside bases in KDP are $50,800. KDP's balance sheet includes the following:

If KDP has a §754 election in place, what is Kathy's special basis adjustment?

$0

$28,300

$16,200

None of these is correct.

23. Kathy is a 25% partner in the KDP Partnership and receives $129,000 cash in complete liquidation of her partnership interest. Kathy's outside basis immediately before the distribution is $151,000. KDP currently has a §754 election in effect and has no hot assets or liabilities. Which of the following statements is true?

KDP will step up the basis of its assets by $22,000 and Kathy will recognize a $22,000 loss on the distribution.

KDP will step up the basis of its assets by $22,000 and Kathy will recognize a $22,000 gain on the distribution.

KDP will step down the basis of its assets by $22,000 and Kathy will recognize a $22,000 loss on the distribution.

KDP will step down the basis of its assets by $22,000 and Kathy will recognize a $22,000 gain on the distribution.

24. Assume Joe Harry sells his 25% interest in Joe's S Corp., Inc. to Tyrone on January 29. Using the daily allocation method, how much income does Joe Harry report if Joe's S Corp., Inc. earned $300,000 from January 1 to January 28 and a total of $1,277,500 from January 1 through December 31 (365 days)?

$25,375.

$75,000.

$98,000.

$300,000.

None of These.

25. Assume Joe Harry sells his 25% interest in Joe's S Corp., Inc. to Tyrone on January 29. Using the specific identification allocation method, how much income does Joe Harry report if Joe's S Corp., Inc. earned $190,000 from January 1 to January 28 and a total of $547,500 from January 1 through December 31 (365 days)?

$10,500.

$47,500.

$42,000.

$190,000.

None of These.

26. Suppose at the beginning of 2015, Jamaal's basis in his S corporation stock was $29,000 and that Jamaal has loaned the S corporation $9,980. During 2015, the S corporation reported an $50,200 ordinary business loss and no separately stated items. How much of the ordinary loss is deductible by Jamaal if he owns 50% of the S corporation?

$9,980.

$29,000.

$38,980.

$40,220.

None of These.

27. Suppose at the beginning of 2015, Jamaal's basis in his S corporation stock is $0, he has a $0 debt basis associated with a $16,000 loan he made to the S corporation and a $11,000 suspended loss from the S corporation. In 2015, Jamaal contributed $14,000 to the S corporation, and the S corporation had ordinary income of $10,000. Assume that Jamaal owns 40% of the S corporation. How much net income or loss does Jamaal report this year from the S corporation?

$10,000 income.

$4,000 income.

$(1,000) loss.

$7,000 loss.

None of These.

28. Suppose Clampett, Inc. terminated its S election on August 28, 2015. At the end of the S corporation's short tax year ending on August 28, J. D.'s stock basis and at-risk amounts were both zero (he has never had debt basis), and he had a suspended loss of $20,850. In 2016, J. D. made additional capital contributions of $5,850 on March 15 and $14,550 on September 20. How much loss may J. D. deduct in 2016?

$0.

$5,850.

$20,400.

$20,850.

None of These.

29. Suppose at the beginning of 2015, Jamaal's basis in his S corporation stock is $1,700, and he has a $10,700 debt basis associated with a $10,700 loan he made to the S corporation. In 2015, Jamaal's share of S corporation income is $4,700, and he received a $7,700 distribution from the S corporation. What is Jamaal's stock and debt basis after these transactions?

$0.0 stock basis; $9,400 debt basis.

$0 stock basis; $10,700 debt basis.

$6,400 stock basis; $10,700 debt basis.

$6,400 stock basis; $3,000 debt basis.

None of these.

30. Clampett, Inc. has been an S corporation since its inception. On July 15, 2016, Clampett, Inc. distributed $55,000 to J. D. His basis in his Clampett, Inc. stock on January 1, 2016, was $48,000. For 2016, J. D. was allocated $5,000 of ordinary income from Clampett, Inc. and no separately stated items. What is J. D.'s basis in his Clampett, Inc. stock after all transactions in 2016?

$53,000.

$48,000.

$43,000.

$5,000.

None of These.

31. Clampett, Inc. has been an S corporation since its inception. On July 15, 2016, Clampett, Inc. distributed $57,000 to J. D. His basis in his Clampett, Inc. stock on January 1, 2016, was $52,000. For 2016, J. D. was allocated $17,000 of ordinary income from Clampett, Inc. and no separately stated items. What is J.D.'s basis in his Clampett, Inc. stock after all transactions in 2016?

$40,000.

$23,000.

$6,000.

$12,000.

None of These.

32. Clampett, Inc. has been an S corporation since its inception. On July 15, 2016, Clampett, Inc. distributed $59,500 to J. D. His basis in his Clampett, Inc. stock on January 1, 2016, was $31,900. For 2016, J. D. was allocated $10,950 of ordinary income from Clampett, Inc. and no separately stated items. How much capital gain does J. D. recognize related to Clampett, Inc. in 2016?

$70,450.

$59,500.

$20,950.

$16,650.

None of These.

33. Clampett, Inc. has been an S corporation since its inception. On July 15, 2016, Clampett, Inc. distributed $48,500 to J. D. His basis in his Clampett, Inc. stock on January 1, 2016, was $39,000. For 2016, J. D. was allocated $11,200 of ordinary income from Clampett, Inc. and no separately stated items. How much capital gain does J. D. recognize related to Clampett, Inc. in 2016?

$59,700.

$48,500.

$22,400.

$11,200.

None of These.

34. Assume that at the end of 2015, Clampett, Inc. (an S corporation) distributes property (fair market value of $50,500, basis of $8,500) to each of its four equal shareholders (aggregate distribution of $202,000). At the time of the distribution, Clampett, Inc. has no corporate E&P and J. D. has a basis of $51,400 in his Clampett, Inc. stock. How much income does J. D. recognize as a result of the distribution?

$0.

$8,500.

$42,000.

$50,500.

None of These.

35. Clampett, Inc. converted to an S corporation on January 1, 2015. At that time, Clampett, Inc. had cash ($38,000), inventory (FMV $58,000, Basis $26,000), accounts receivable (FMV $38,000, Basis $38,000), and equipment (FMV $58,000, Basis $78,000). In 2016, Clampett, Inc. sells its entire inventory for $58,000 Basis ($26,000). Assuming the corporate tax rate is 35%. How much built-in gains tax does Clampett, Inc. pay in 2016?

$9,100.

$12,000.

$4,200.

$0.

None of These.

36. Assume that Clampett, Inc. has $210,000 of sales, $160,000 of cost of goods sold, $70,000 of interest income, and $50,000 of dividends. What is Clampett, Inc.'s excess net passive income?

$0.

$37,500.

$87,500.

$120,000.

None of These.

Basis FMV Cash $12,000 $12,000 Unrealized receivables          0 18,000 Total $12,000 $30,000

Explanation / Answer

36.

excess net passive income= 120000 - 50000 = 70000

therefore, none of these is correct answer.

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