1) X, Y and Z form a partnership, X is a corporation with a 7/31 fiscal year, Y is a corporation with a 1/31 fiscal year, and Z is a calendar year individual. What is the partnership's required taxable year if the partners share profits and capital in the following alternative proportions.

a) 60% X, 20% Y, 20% Z

b)50% X, 30% Y, 20% Z

c) Assume the XYZ partnership's principal business activity is the preparation of tax returns. What taxable year might it prefer? Is that choice available to it?

2) The AB Partnership had the following income and expenses for the past calendar year.

Gross Income from business operations	$130
Expenses deductible under 162(a)	$40
Depreciation on machinery (calculated under the 200% declining balance method)	$30
Charitable gifts	$20
Gain on sale of equipment used in the partnership business, $20 of which is ordinary under Section 1245(a), and $10 of which is 1232 gain	$30
Short term capital gain on stock sale	$10
Interest on tax exempt bonds	$40
Dividends on stock	$20
Gain on sale of land held for 4 years by the partnership for investment purposes	$100

A and B are equal partners who use the cash method and the calendar year.

1.How will the partnership, A and B report these items?

2.Would the treatment of the gain in item (9) be different if A were a dealer in real estate?Assume, in the alternative, that the partnership acquired the land (i) from A as a contribution to the partnership, or (ii) by purchase from a third party.

3.A's adjusted basis for his partnership interest was $20 at the beginning of this taxable year of the partnership.What was his adjusted basis at the end of the year if the partnership made no distributions to the partners during the year?