partnership questions
Chapter 11
True/False
Indicate whether the statement is true or false.
____ 1. A property distribution from a partnership to a partner is generally taxable to the partner.
____ 2. For Federal income tax purposes, a distribution from a partnership to a partner is treated the same as a distribution from a C corporation to its shareholders.
____ 3. In a liquidating distribution, a partnership need not distribute all of its property to all of its partners.
____ 4. A distribution cannot be “proportionate” if only one partner receives assets from the partnership.
____ 5. For income tax purposes, proportionate and disproportionate distributions from a partnership are treated similarly.
____ 6. Generally, gain is recognized on a proportionate current or liquidating distribution if the fair market value of property distributed exceeds the partner’s basis in the partnership interest.
____ 7. In a proportionate nonliquidating distribution of cash and a capital asset, the partner recognizes gain to the extent the amount of cash distributed exceeds the partner’s basis in the partnership interest.
____ 8. In a proportionate nonliquidating distribution, cash is deemed to be distributed first, followed by unrealized receivables and inventory and, last, capital and other assets.
____ 9. For purposes of determining gain on a current distribution to a partner, a distribution of cash includes relief of a partner’s share of partnership liabilities and certain distributions of marketable securities.
____ 10. The LMO Partnership distributed $30,000 cash to Emma in a proportionate, nonliquidating distribution. Emma’s basis in her partnership interest was $25,000 immediately before the distribution. As a result of the distribution, Emma’s basis is reduced to $0 and she recognizes a $5,000 gain.
____ 11. Jared owns a 40% interest in the capital and profits of the JAJ Partnership. Immediately before he receives a proportionate nonliquidating distribution
True/False
Indicate whether the statement is true or false.
____ 1. A property distribution from a partnership to a partner is generally taxable to the partner.
____ 2. For Federal income tax purposes, a distribution from a partnership to a partner is treated the same as a distribution from a C corporation to its shareholders.
____ 3. In a liquidating distribution, a partnership need not distribute all of its property to all of its partners.
____ 4. A distribution cannot be “proportionate” if only one partner receives assets from the partnership.
____ 5. For income tax purposes, proportionate and disproportionate distributions from a partnership are treated similarly.
____ 6. Generally, gain is recognized on a proportionate current or liquidating distribution if the fair market value of property distributed exceeds the partner’s basis in the partnership interest.
____ 7. In a proportionate nonliquidating distribution of cash and a capital asset, the partner recognizes gain to the extent the amount of cash distributed exceeds the partner’s basis in the partnership interest.
____ 8. In a proportionate nonliquidating distribution, cash is deemed to be distributed first, followed by unrealized receivables and inventory and, last, capital and other assets.
____ 9. For purposes of determining gain on a current distribution to a partner, a distribution of cash includes relief of a partner’s share of partnership liabilities and certain distributions of marketable securities.
____ 10. The LMO Partnership distributed $30,000 cash to Emma in a proportionate, nonliquidating distribution. Emma’s basis in her partnership interest was $25,000 immediately before the distribution. As a result of the distribution, Emma’s basis is reduced to $0 and she recognizes a $5,000 gain.
____ 11. Jared owns a 40% interest in the capital and profits of the JAJ Partnership. Immediately before he receives a proportionate nonliquidating distribution