Prentice Hall's Federal Taxation 2012: Corporations

Prentice Hall's Federal Taxation 2012: Corporations, 25e (Pope/Anderson/Kramer)

Chapter C9 Partnership Formation and Operation

1) Formation of a partnership requires legal documentation filed with the Secretary of State.

Answer: FALSE

Page Ref.: C:9-2

2) A partner's basis for his partnership interest can be negative.

Answer: FALSE

Page Ref.: C:9-4

3) The holding period of a partnership interest acquired in exchange for a contributed capital asset begins on the date the partner transfers the asset to the partnership.

Answer: FALSE

Page Ref.: C:9-8

4) A partnership cannot make charitable contributions.

Answer: FALSE

Page Ref.: C:9-16

5) ABC Partnership distributes $12,000 to partner Al. Al's distributive share of partnership income is $20,000. Al is taxed on $20,000.

Answer: TRUE

Page Ref.: C:9-17

6) A partner's "distributive share" is the partner's share of any assets distributed by the partnership.

Answer: FALSE

Page Ref.: C:9-17

7) A partner's share of nonrecourse debt increases that partner's share of basis.

Answer: TRUE

Page Ref.: C:9-22

8) A partner's basis for his or her partnership interest is increased by his share of the partnership's tax-exempt income.

Answer: TRUE

Page Ref.: C:9-24

9) Limited partners must consider the at-risk, basis, and passive loss limitations when determining the amount of their deductible loss.

Answer: TRUE

Page Ref.: C:9-26 and C:9-27

10) No gain is recognized on the sale of property between a partnership and a more-than-50% partner.

Answer: FALSE

Page Ref.: C:9-28

11) Guaranteed payments are always ordinary income to the recipient.

Answer: TRUE

Page Ref.: C:9-28

12) A partnership must file Form 1065 only if its income exceeds $1,000.

Answer: FALSE

Page Ref.: C:9-32

13) Identify which of the following statements is true.

A) Formation of a partnership requires legal documentation.

B) An individual engaged in the active conduct of a business...