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ACCT 422 Accounting Unit 11 Multiple Choice Q&As with Explanations

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ACCT 422 481 UNIT 11 Question: 1 Baker is a partner in BDT with a partnership basis of $60,000. BDT made a liquidating distribution of land with an adjusted basis of $75,000 and a fair market value of $40,000 to Baker. What amount of gain or loss should Baker report? A. B. C. D. $15,000 gain. $35,000 loss. $20,000 loss. $0 Answer (D) is correct. A partner recognizes gain only to the extent a money distribution exceeds the AB in the partnership interest immediately before the distribution. In the case of capital property distributions, there is no gain or loss; instead, the partner’s basis in the property is adjusted for any variance between the partner’s partnership basis and the partnership’s AB in the property distributed. Therefore, Baker has a $0 gain (loss). Question: Which of the following statements with respect to tax-exempt organizations is false? 2 A. A church does not have to file a Form 990 annual information return. B. A foundation set up for testing for public safety may qualify for tax-exempt status. C. In order to qualify as an exempt organization, the organization must be a corporation, partnership, foundation, or community chest. Answer (C) is correct. Exempt status depends, generally, on the nature and purpose of an organization. Among the types of organizations that may qualify as exempt are corporations, trusts, foundations, funds, community funds, etc. A more complete list can be found in Sec. 501(c) along with the permitted stated purposes and ...
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