taxation question for 2015

Sigchi4life
Category:
Accounting
Price: $25 USD

Question description

1.  Rachael and Ray form an equal 
partnership R&R on January 1, 20X1. 
Rachael contributes $100,000 in exchange 
for her one-half interest; Ray 
contributes land worth $100,000. Ray's 
adjusted basis in the land is $30,000. 
Ray is a real estate developer, and at 
the time of the contribution, the land 
was inventory in his hands. The land is 
a capital asset in the hands of R&R. If 
R&R sells the land in 20X7 for $180,000,
a.  R&R will recognize $150,000 of 
capital gain.
b.  R&R will recognize $150,000 of 
ordinary income.
c.  R&R will recognize $80,000 of 
ordinary income and $70,000 of capital 
gain.
d.  R&R will recognize $80,000 of 
ordinary income.
e.  R&R will recognize $80,000 of 
capital gain.

2.  At January 1, 2015, Jody's basis 
in her partnership interest was $25,000. 
Her share of partnership items for the 
year is as follows: dividend income of 
$6,000 and an ordinary loss of $48,000. 
She received a distribution from the 
partnership of $15,000 during the year. 
She must report the following related to 
these transactions.
a.  Dividend income of $6,000, a 
nontaxable distribution of $15,000, an 
ordinary loss of $10,000, and a 
suspended loss of $38,000.
b.  Dividend income of $6,000, an 
ordinary loss of $31,000, a suspended 
loss of $17,000, and a taxable 
distribution of $15,000.
c.  Dividend income of $6,000, a 
nontaxable distribution of $15,000, an 
ordinary loss of $16,000, and a 
suspended loss of $32,000.
d.  Dividend income of $6,000, an 
ordinary loss of $48,000 and a 
nontaxable distribution of $15,000.
e.  Dividend income of $6,000, an 
ordinary loss of $48,000 and a taxable 
distribution of $15,

3.  Wayne owns 60 percent and Larry 
owns 40 percent of the profits and 
losses of the WL partnership. On January 
1, 20X4, the basis in their respective 
partnership interests is $60,000 and 
$10,000. During 20X4, WL reports taxable 
ordinary income of $50,000 and has the 
following separately stated items: 
qualified dividend income of $1,000; 
taxable interest income of $2,600; 
charitable contributions of $3,000; and 
Sec. 179 expense of $20,000. During the 
year, partnership liabilities decreased 
by $25,000 and there were no 
distributions made to either partner 
(assume liabilities are allocated based 
on profit and loss sharing ratios). On 
December 31, 20X4, which of the 
following correctly states the basis in 
each partner's interest in WL?
a.  Wayne: $63,360 and Larry: 
$12,240
b.  Wayne: $65,520 and Larry: 
$12,680
c.  Wayne: $90,360 and Larry: 
$30,240
d.  Wayne: $92,160 and Larry: 
$31,440

Tutor Answer

(Top Tutor) Daniel C.
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School: UT Austin
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