10. Indigo has a basis orsi million inthe stock of Owl Corporation, a subsidiary in which it owns 100% of all classes of stock. Indigo purchased the stock in Owl 10 years ago. In the current year, Indigo liquidates Owl and acquires assets worth $1.2 million. At the time of its liquidation, Owl Corporation had a basis of S800,000 in the assets and E & P of $500,000. Which of the following statements is correct with respect to the liquidation? a. Owl recognizes a gain of $400,000 b. Indigo has an $800,000 basis in the assets. c. Owl's E & P of $500,000 is eliminated. d. Indigo recognizes a gain of $200,000 e. None of the above 11. Which one of the following statements is TRU assets? a. LLC members can never be liable for entity debts. b. In a limited partnership, all partners have limited liability for partnership debts E regarding a partner's personal liability for partnership c. In a limited liability partnership, the partner might be subject to liability for other partners' malpractice. d. In a general partnership, all partners are liable for entity debts e. None of the above statements are true. 12. A partnership will take a carryover basis in an asset it acquires when: a. The partnership acquires the asset through a S 1031 like-kind exchange. b. A partner owning 25% of partnership capital and profits sells the asset to the partnership c. The partnership leases the asset from a partner on a one-year lease. d. The partnership acquires the asset from a partner as a contribution to partnership capital under 721 (a) e. None of the above; the partnership always takes a substituted basis in the assets it receives. 13. In which of the following independent situations would the transaction most likely be characterized as a disguised sale? a. Partner George contributes appreciated property to the GM Partnership, and three years later GM distributes $100,000 proportionately to the partners. b. Brianna contributes property with a basis of $20,000 and a fair market value of $50,000 to the BGB Partnership in exchange for a 20% interest therein. The partnership agrees to distribute $20,000 to Brianna in fifteen months, if partnership cash flows from operations exceed $100,000 at that time. The partnership does not expect to produce operating cash flows of over $100,000 for at least five years. c. Luis contributes appreciated property to the BLP Partnership. Thirty months later, he receives a distribution from the partnership of $15,000 cash. None of the other partners received a distribution There was no agreement that BLP would make the distribution, and Luis would have made the contribution whether or not the partnership made the distribution. d. None of the above transactions will be treated as a disguised sale e. a., b., and c. are all treated as disguised sales. 14. ACME Partnership has had the following gross receipts since its formation: $21.8 million in 2018 $24.6 million in 2019, $28.8 million in 2020, $21.6 million in 2021, and $32 million in 2022. Partner Meile, Inc. is a C corporation. In what tax years must ACME use the accrual method? a. 2018 and all following years, because it has a partner that is a C corporation. b. 2020 and all following years, because gross receipts are more than $25 million that year c. 2021 and all following years, because average annual gross receipts are more than $25 million in 2020. d. 2020 and 2022 because those are the only years in which gross receipts exceeded $25 million. e. 2021 and 2022 because those are the only years in which the prior years' gross receipts exceeded $25 million
