Multiple Choice Questions
1. Carmin performs services in exchange for a 25% interest in Real Estate Rental Partnership. The services were worth $15,000. The tax implications to Carmin are:
a. No taxable income and a partnership interest with a basis of $0.
b. No taxable income and a partnership interest with a basis of $15,000.
c. $15,000 of taxable income and a partnership interest with a basis of $0.
d. $15,000 of taxable income and a partnership interest with a basis of $15,000.
2. Billy contributes land with a FMV of $7,000 and a basis of $3,000 to a partnership in return for a 5% partnership interest in ABCD partnership. Billy€™s basis in the partnership
a. Is $0.
b. Is $3,000.
c. Is $7,000.
d. Cannot be determined.
3. Billy contributes land with a FMV of $7,000 and a basis of $3,000 to a partnership in return for a 5% partnership interest in ABCD partnership. ABCD€™s basis in the land:
a. Is $0.
b. Is $3,000.
c. Is $7,000.
d. Cannot be determined.
4. Jake has a Schedule C (that reports on the cash basis of accounting) with the following assets:

Jake contributes these assets to form AJ Partnership and receives a 50% interest. His basis in the partnership interest is:
a. $ 0.
b. $ 99,500.
c. $159,500.
d. $169,500.
5. Jake has a Schedule C with the following assets:

Jake contributes these assets to form AJ Partnership and receives a 50% interest. AJ€™s basis in the assets is:
a. Cash $4,500; A/R $0; Building $155,000.
b. Cash $4,500; A/R $10,000; Building $155,000.
c. Cash $4,500; A/R $0; Building $95,000.
d. Cash $4,500; A/R $10,000; Building $95,000.
6. Allie contributed the following business assets to ASW Partnership on August 1, 2014:

What is the holding period for the building and the inventory to ASW Partnership?
a. Building €“ long-term capital or § 1231 asset.
b. Building €“ short-term ordinary asset.
c. Inventory €“ short-term ordinary asset.
d. Botha and c.
7. Shelly contributed the following business assets to S&S Partnership on March 3, 2014:

What is the basis in the equipment and the accounts receivable to S&S?
a. Equipment $0; Accounts Receivable $ 0.
b. Equipment $75,000; Accounts Receivable $ 0.
c. Equipment $45,000; Accounts Receivable $ 0.
d. Equipment $45,000; Accounts Receivable $100,000.
8. Which of the following is considered when calculating ordinary income to a partnership?
a. Dividend income.
b. § 179 expense
c. Guaranteed payments to partners.
d. Capital gains and losses.
9. Styron is a partner in Styron, Lee, & Jane Partnership. Styron owned 25% from January 1, 2014 to June 30, 2014, when he bought Lee€™s 25% interest. He owned 50% for the rest of the year. The partnership had ordinary income of $88,000 and $12,000 in long-term capital gains. Barring any special allocations in a partnership agreement, Styron€™s share of ordinary income for the year is:
a. $ 11,000.
b. $ 33,000.
c. $ 88,000.
d. $100,000.
10. All of the following are considered separately stated items to a partnership except:
a. Charitable contributions.
b. § 179 expense
c. Depreciation.
d. Capital gains and losses.
11. Which of the items below from a partnership go into the calculation of a partner€™s self-employment income:
a. Rental income.
b. Dividend income.
c. Interest income.
d. § 179 expense

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FMV $4,500 10,000 155,000 Basis Cash Accounts Receivable (AR) Building $4,500 95,000 Basis FMV $4,500 10,000 $4,500 Cash Accounts Receivable (AR) Building Date Purchased by Allie 07/01/01 05/08/11 Basis EMY Building $175,000 $300,000 Inventory 50,000 $100,000 FM Date Purchased by Shelly Basis Equipment $75,000 45,000 Acct. Rec 0 $100,000 07/01/00 Various