Alice has had an interest in partnership Quagmire for 3 years. On November 1, she contributed her partnership interest, subject to her share of partnership liabilities, to the local nonprofit cancer research center. The partnership has no assets that would generate ordinary income if sold. At the time of the contribution, the fair market value (FMV) of her partnership interest was $200,000. Her original contribution was $90,000 and her share of partnership losses was $110,000. In addition, Alices share of partnership liabilities was $120,000. What is the amount of her charitable contribution?

a) $200,000

b) $ 90,000

c) $ 80,000

d) $120,000

2. John and Susan formed a partnership. Susan contributed $50,000 in cash and John contributed property with an adjusted basis of $60,000 and a fair market value of $55,000. The partnership sold the property two years after forming the partnership for $45,000. How much capital gain or loss should the partnership recognize on the sale of the contributed property?

a) $10,000 gain

b) $15,000 loss

c) $10,000 loss

d) $ 5,000 loss

3. April gave each of her two children, Mary and Mark a 1/3 interest in her retail clothing store. Capital is a material income-producing factor. Mary is 21 and has worked in the store since she was 16. She has developed business skills and is very helpful to April. Mark is married and lives out of state. He does not participate in any of the decision making for the store. Who are recognized as partners?

a) Only Mary

b) Only April and Mary

c) Only April

d) April, Mary, and Mark

4. Gain recognized by a partnership due to the disposition of contributed property classified as unrealized receivables is considered:

a) Capital gain

b) Ordinary income

c) A nonrecognition transaction

d) Qualified income

5. John contributed a piece of equipment to XYZ partnership. Six months later, the partnership transferred an automobile to John. What is John required to do because of these transactions?

a) John must file a disclosure statement, Form 8275 with his tax return.

b) John has no requirements relative to these transactions.

c) John must provide a statement to the partnership.

d) John is not required to do anything out of the ordinary.