c. The partnership has $8,000 in interest income from tax exempt municipal bonds. d. e. The partnership makes a cash distribution of $10,000 to each partner. The partnership exchanged rental real estate with a fair market value of $100,000 and an adjusted basis of $30,000 for other real estate worth $100,000 in a 1031 exchange. f. The partnership received $5,000 for granting an option on a building it owns, which is worth $1 million. g. During the year, a lease was terminated. The partnership's lessee expend- ed $30,000 in improvements which were not substitutes for rent during the lease period. The fair market value of the improvements was $50,000 on the date the partnership took possession of the leased premises. 2. h. The partnership paid $2,000 in life insurance premiums to insure the lives of key employees, with the partnership named as beneficiary. Same as question 1 above, except that item (b) is a distributive share of part- nership loss (instead of gain) in the amount of $10,000 to each partner. If all of the loss is not allowed to a partner, what is the character of the disallowed loss? 3. Using the facts of question 2 above, assume that on January 1 of the next year, B sold her partnership interest to C for $10,000. Assume that the AC partner- ship has no income or deductions for that year. Does C succeed to B's car- ryover loss? What if B in the following year repurchases the partnership inter- est from C? 4. AB, an equal cash method partnership with cash method partners, ordered sta- tionery and othe etarial supplies in the amount of $300. Before payment but after transfer of title, is there any effect on the tax basis of each partner's partnership interest? What if the liability were for services already performed but not yet paid? 5. A and B form the equal AB partnership which has no realty activities. Each contributed $10,000 to the capital the partnership. The partnership pur- chased personal property for $20,000 cash, subject to an $80,000 recourse mortgage which is a general obligation of the partnership. The partnership suf- fered a $30,000 loss attributable exclusively to depreciation on the personal property in its first year of operation. What are the partners' bases for their partnership interests? How much of the partnership loss may each partner deduct? What if instead the partnership lia- bility is nonrecourse? c. The partnership has $8,000 in interest income from tax exempt municipal bonds. d. e. The partnership makes a cash distribution of $10,000 to each partner. The partnership exchanged rental real estate with a fair market value of $100,000 and an adjusted basis of $30,000 for other real estate worth $100,000 in a 1031 exchange. f. The partnership received $5,000 for granting an option on a building it owns, which is worth $1 million. g. During the year, a lease was terminated. The partnership's lessee expend- ed $30,000 in improvements which were not substitutes for rent during the lease period. The fair market value of the improvements was $50,000 on the date the partnership took possession of the leased premises. 2. h. The partnership paid $2,000 in life insurance premiums to insure the lives of key employees, with the partnership named as beneficiary. Same as question 1 above, except that item (b) is a distributive share of part- nership loss (instead of gain) in the amount of $10,000 to each partner. If all of the loss is not allowed to a partner, what is the character of the disallowed loss? 3. Using the facts of question 2 above, assume that on January 1 of the next year, B sold her partnership interest to C for $10,000. Assume that the AC partner- ship has no income or deductions for that year. Does C succeed to B's car- ryover loss? What if B in the following year repurchases the partnership inter- est from C? 4. AB, an equal cash method partnership with cash method partners, ordered sta- tionery and othe etarial supplies in the amount of $300. Before payment but after transfer of title, is there any effect on the tax basis of each partner's partnership interest? What if the liability were for services already performed but not yet paid? 5. A and B form the equal AB partnership which has no realty activities. Each contributed $10,000 to the capital the partnership. The partnership pur- chased personal property for $20,000 cash, subject to an $80,000 recourse mortgage which is a general obligation of the partnership. The partnership suf- fered a $30,000 loss attributable exclusively to depreciation on the personal property in its first year of operation. What are the partners' bases for their partnership interests? How much of the partnership loss may each partner deduct? What if instead the partnership lia- bility is nonrecourse