1- Jim\'s basis in his partnership is $200,000. His share of the current year pa
ID: 2576208 • Letter: 1
Question
1-
Jim's basis in his partnership is $200,000. His share of the current year partnership income is $60,000. The partnership paid him a $75,000 distribution in the current year. What is his new basis in the partnership at the end of the year and what is his taxable income from the partnership?
a.$185,000; $135,000
b.$260,000; $60,000
c.$200,000; $75,000
d.$185,000; $60,000
e.$140,000; $60,000
2-
An equal partnership is formed by Rita and Gerry. Rita contributes cash of $10,000 and a building with a fair market value of $150,000, adjusted basis of $55,000, and subject to a liability of $60,000. Gerry contributes cash of $100,000. What amount of gain must Rita recognize as a result of this transaction?
a.$5,000
b.$0
c.$95,000
d.$35,000
e.None of these choices are correct.
3-
Calculator
The partnership of Truman and Hanover realized the following items of income during the year ended December 31, 2016:
Both the partners are on a calendar year basis. What is the total income which should be reported as ordinary income from business activities of the partnership for 2016?
a.$71,000
b.$65,000
c.$0
d.$69,000
e.None of these choices are correct.
Net income from operations $65,000 Dividends from domestic corporations 4,000 Interest on corporate bonds 3,000 Net long-term capital gains 5,000 Net short-term capital gains 1,000Explanation / Answer
1.
Jim's share of the current year partnership income = $60,000
Distribution from the partnership to Jim = $75,000
Therefore,
Jim's new basis in the partnership at the end of the year = $200,000 - $75,000 + $60,000 = $185,000
And,
Jim's taxable income from the partnership = $60,000
Thus, the correct answer is d.$185,000; $60,000
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