1) With the advent of the LLC and the LLP: a) The S corporation is rarely used because its profits are subject to double taxation. b) The S corporation is still used because the LLC and LLP do not offer limited liability protection to passive investors. c) The S corporation is still used, partly for self-employment tax reasons. d) The S corporation is still used because many real estate investors find it attractive.

2) The default rule is that a multi-member LLC is taxed as: a) A corporation b) A partnership c) A disregarded entity d) A trust

3) If Doctor Jones and Doctor Smith share office space and secretarial assistance, but they do not share profits, they have likely created a partnership for federal income tax purposes and will need to file a partnership tax return. a) True b) False

4) When a taxpayer contributes property to a partnership in exchange for a partnership interest and the fair market value of that property exceeds its tax basis: a) The transaction is generally taxable and the taxpayer will recognize gain equal to the excess. b) The transaction is generally not taxable and the partnership will take a tax basis in the property equal to its fair market value. c) The transaction is generally not taxable and the partner will take a tax basis in his partnership interest equal to his tax basis in the property contributed. d) The partnership will have income equal to the fair market value of the property.

5) Which of the following is not a requirement of the primary test for economic effect? a) The capital account requirement b) The liquidation requirement c) The requirement of an unlimited deficit restoration obligation d) A qualified income offset provision

6) Which of the following items does not have to be separately stated on a partnership's tax return: a) Cost of goods sold b) Long-term capital gain c) Sec. 1231 gain d) Short-term capital loss

7) When a partnership distributes property to a partner, the partnership reduces the partner's book capital account by its tax basis in the property distributed. a) True b) False