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1 | |
In the context of partnerships the partner with unlimited liability for the outstanding debts of the partnership at liquidation is? |
| | A) | General Partner |
| | B) | Limited Partner |
| | C) | Both the general and limited partners are responsible. |
| | D) | Neither general or limited partners are responsible. |
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2 | |
Which of the following statements about partnerships is true? |
| | A) | Limited partnerships only require that a general partner exist and that general partner can also be the only limited partner. |
| | B) | Partnerships are incorporated entities. |
| | C) | Limited Liability companies are taxed as partnerships even though all members have limited liability. |
| | D) | The partnership agreement once created can never be changed. |
| | E) | None of these statements regarding partnerships is true. |
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3 | |
The items of income, gain, expense, or loss that must be stated on each partners return in proportion to their ownership or as set out in the partnership agreement are generally known as? |
| | A) | Special items. |
| | B) | Non-separable items. |
| | C) | Tax Preference items. |
| | D) | Separately Stated items. |
| | E) | Special Partnership items. |
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4 | |
Slowwalk Partnership experienced an operating loss of $30,000. If Sally is a 25% owner in Slowwalk and the basis in her partnership interest is $3,000, how much can Sally report of the loss on her return for the current period? |
| | A) | $7,500 |
| | B) | $3,000 |
| | C) | $8,500 |
| | D) | $4,500 |
| | E) | Not enough information to determine an answer. |
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5 | |
With regard to the employment status of partners, which of the following is true? |
| | A) | Partners are never considered employees for purposes of FICA taxes. |
| | B) | Only partners that own more than 2 percent of the partnership are never considered employees. |
| | C) | Only partners receiving guaranteed payments are considered employees |
| | D) | All partners are considered employees if they perform duties for the partnership. |
| | E) | None of the statements is true. |
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6 | |
Jack and Jill go up the hill and form a equal share partnership. Jill contributes $30,000 of cash and Jack contributes a $35,000 asset with a basis of $20,000 subject to a $5,000 liability. If the partnership assumes the liability what is Jack's basis in his partnership interest? |
| | A) | $20,000 |
| | B) | $22,500 |
| | C) | $25,000 |
| | D) | $17,500 |
| | E) | Some other answer. |
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7 | |
To be granted partnership status for purposes of federal taxation LLCs must have at least 3 members. |
| | A) | True |
| | B) | False |
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8 | |
Currently S corporations can have no more than___ shareholders. |
| | A) | 25 |
| | B) | 35 |
| | C) | 50 |
| | D) | 45 |
| | E) | 75 |
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9 | |
If the IRS Code under Subchapter S does not provide an adequate answer to a tax question regarding S corporations, taxpayers should look to ______ for guidance? |
| | A) | Subchapter K |
| | B) | Subchapter C |
| | C) | Subchapter Z |
| | D) | Subchapter L |
| | E) | Some other answer. |
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10 | |
For purposes of deducting current losses, S corporate shareholders are allowed to increase their share basis a proportionate share of outstanding corporate debt. |
| | A) | True |
| | B) | False |
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2002 McGraw-Hill Higher Education