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Which of the following is an element of the requirement that partnership allocations must have substantial economic effect? If an allocation of income, loss, or deduction is made for tax purposes, a similar allocation must be made for partnership book purposes so the partner's capital account (and rights to partnership capital) reflect a corresponding increase or decrease. Liquidations must be made in accordance with partner's capital accounts and a partner with a negative capital account must have the obligation to restore the capital account deficit in case of liquidation. Even if corresponding allocations are made for tax purposes and book purposes, those allocations must be made for economic reasons independent of minimizing taxes based on the partners' individual tax situations. All of these are elements of substantial economic effect

QUESTION 2 Which one of the following alternatives is correct? A. To ensure that compliance is followed, the financial statements of partnerships must be prepared according to IFRS. B. When recording the valuation adjustments, if the value of a liability is decreased, the valuation account credited with the amount of a decrease. C. The selling price of the partnership business is determined by the value of its assets. D. An existing goodwill account balance is transferred to the partners' capital accounts on admission of a new partner. E. The fair value of the assets of a partnership is equal to the total equity of a partnership.

Statement I: All Partnerships are taxable entities.Statement II: Only individuals are allowed to be partners in a Partnership Group of answer choices Both statements are false S1 is true; S2 is false Both statements are true S1 is false; S2 is true

18. If the partnership agreement does not specify how income is to be allocated among the partners, profits should be allocated: a. In accordance with some pre-established ratio b. In proportion to the weighted average of capital invested during the period c. Equally d. Equitably so that the partners are compensated for the time and effort expended on behalf of the partnership

Tax Drill - Effect of Partnership Operations on Basis Indicate whether the following items "Increase" or "Decrease" a partner's basis in the partnership. a.   A partner's proportionate share of nondeductible expenses.   b.   A partner's proportionate share of any increase in partnership liabilities.   c.   A partner's proportionate share of partnership income.   d.   A partner's proportionate share of any reduction in partnership liabilities.

If no agreement exists in a partnership as to the allocation of income, what method is appropriate?     a. receives equal allocations.     b. receives an amount equal to their contributions.     c. receives amounts based on their balance in their partnership capital accounts.       d. receives an amount equal to the losses.

When a new partner is admitted into a partnership and the new partner receives a capital credit greater than the tangible assets contributed, which of the following explains the difference?  I. The old partners' goodwill is being recognized.  II. The new partner's goodwill is being recognized Select one: a. II only b. Both I and II c. Either I or II d. I only

Which of the following is correct with regards to partnership liquidation? a. All creditors must be paid in full before distributions can be made to partners b. Partners’ capital contributions and undistributed partnership income are viewed as distinct in the Uniform Partnership Act c. All creditors are equal with regards to priority claim against partnership assets d. Loans from partners to the partnership have same priority claim against partnership assets as to creditor claims from other entities

Which of the following regarding partnership taxation is INCORRECT?   Question 16 options:   A partnership is a tax paying entity for Federal income tax purposes.   Partnership income is comprised of ordinary partnership income or loss and separately stated items   A partnership is required to file a return with the IRS.    A partner’s profit-sharing percent may differ from the partner’s loss-sharing percent.   All of these statements are correct.

question 30 choose the correct answer from the choices

IRC Section 721 provides that, in general, no gain or loss is recognized by the partnership or the partner on the contribution of appreciated or depreciated property to a partnership in exchange for an interest in the partnership as long as the contributing partner(s) own at least 80 of the partnership. Group of answer choices True False

guaranteed payments made by a partnership to partners for services rendered to the partnership, that are deductible business expenses under the IRC code are:  1. Deductible expenses on the U.S. partnership return of income, form 1065 inorder to arrive at partnership income(loss). 2. Included on schedules K-1 to be taxed as ordinary income to the partners.   1 only 2 only Both 1 and 2 Neither 1 nor 2

Which of the following statements is FALSE?   A. A basis adjustment under 734(b) attributable to a partnership distribution is designed to protect the partners who did not receive the distribution from recognizing built-in gains that belong to the distributee partner.   B. In order to determine the correct tax result for payments to a deceased or retired partner, one must first determine the retiring/deceased partner's share of the fair market value of partnership assets. Unrealized receivables are not considered an "asset" for this purpose if capital is not material income producing factor (such as a law firm).   C. Payments to a retiring partner that compensate the partner for his share of the fair market value of partnership property are treated as guaranteed payments.   D. All of the above statements are TRUE