For each question on, you should assume that:

* unless expressly stated to the contrary, all events occurred in the current taxable year;

* all persons are United States citizens;

* there is no tax avoidance purpose for any transaction, and that with respect to any mortgage on any property, there was a bona fide business purpose for incurring or assuming the debt;

* unless expressly stated to the contrary, the partnership has no hot assets, has no debts or other liabilities, and does not have a Section 754 election in effect;

* each partnership is a general partnership;

* there are no special allocation provisions contained in any partnership agreement; and

* unless expressly stated to the contrary, or the context of the questions requires a conclusion that the distribution was not pro rata - such as the liquidation of the interest of just one partner, all partnership distributions were pro rata.

7. Bob contributed a building with an adjusted basis to Bob of $50,000 and a fair market value of $150,000 subject to a mortgage of $120,000 in exchange for a 30 percent interest in the Alpha Partnership. Alpha will assume the mortgage on the building. What is Alpha's basis in the building?

a. $0

b. $30,000

c. $50,000

d. $84,000

8. Which, if either, of the following statements is or are true?

A partnership Schedule K-1 to Form 1065 must separately state long-term capital gains and losses but not short-term capital gains and losses.

As a general rule, a partners initial basis in his or her partnership interest equals the total of the fair market value of his/herproperty plus money, if any, contributed by the partner to the partnership.

a. I only

b. II only

c. Both I and II

d. Neither I nor II

9. Which, if either, of the following statements is or are false?

Tax exempt income received by a partnership, for example, municipal bond interest, does not increase a partners basis in his/her partnership interest because the income is not taxable.

A partner who receives a current property distribution (other than cash), made pro rata to all the partners, will not have to report a gain with respect to the distribution.

a. I only

b. II only

c. Both I and II

d. Neither I nor II