Hi, Could you please help me solve the problem #4 and #5 in 2 hours? Thanks a lot. Please let me know.

AC 361 - Midterm Exam - FALL 2011 Joanne Ferris, Instructor -- Page #1 GENERAL: The take-home examination is open book & notes, and calculators may be used. Since it's a take-home exam, I won't be able to monitor how long you really spend on the test but try to spend no more than six or seven ( 6 or 7) hours on the test. The point allocation is shown, and please show all your work so that partial credit may be given when appropriate. Problem #1 - 18 Points: On l July 2010, Jennifer (a cash basis, calendar year taxpayer) made an installment sale of some specialized, custom made printing equipment. Jennifer originally purchased the printing equipment system on 2 January 2006 for a total cost of $950,000. AC361 - Midterm Exam - FALL 2011- Page #2 Problem #2 - 12 Points: Jane acquired a 40% interest in the Waterstone General Partnership by contributing investment land with an adjusted basis of $24,000 and a fair market value of $105,000; Jane had originally acquired the land on 2/2/1991. The land was subject to a $35,000 mortgage which was assumed by the Waterstone General Partnership as part of the deal. Mike acquired a 60% partnership interest in the partnership in exchange for a capital contribution of $105,000 in cash. Both capital contributions occurred on 1 January 2010. The partnership used the land contributed by Jane to operate a parking lot. During 2010, the partnership had net rental income from renting out the land of $160,000. In addition, on 25 December 2010, the land was sold for a total sales price of $125,000 ($90,000 of cash PLUS the buyer assumed the $35,000 mortgage). The partnership distributed $20,000 of cash during 2010 ($8,000 to Jane & $12,000 to Mike). In addition, the partnership borrowed $40,000 during 2010, and this recourse loan was still outstanding as of 12/31/2010. REQUIRED: A. How much and what type of income must Jane report from 2010 partnership activity? B. What is Jane's basis in the partnership @12/31/2010? AC 361 - Midterm Exam - FALL 2011- Page #3 Problem #3 - 16 Points: The Estate of Jeff Mitchell was formed on 7 July 2010 and duly adopted an initial tax year ending 31 December 2010. Jeff Mitchell was a California resident, and, under California law, 50% of fiduciary fees are chargeable to \"corpus\" (also called \"principal\") and 50% are chargeable to income for purposes of determining Aaccounting income@. In California, capital gains are allocated 100% to \"corpus\"unless the will states differently (which it does NOT in the case of Jeff's estate - i.e., Jeff's estate follows the general California rule for capital gains). The estate's activity for the initial period from 7 July 2010 through 31 December 2010 was as follows: Received dividend income on US corporate stocks..................... $ 500,000 Received nontaxable California municipal bond interest income. $ 150,000 Received gross rental income on a parking lot.............................. $ 750,000 Received sales proceeds of stock sold on 12/26/2009 of................ (The stock was valued at $525,000 in Tyr's estate & had originally been purchased by Tyr on 5 February 1989 for $180,000) $ 700,000 Paid property taxes & insurance on the parking lot of.................. ($ 65,000) Paid fiduciary fees of..................................................................... ($ 45,000) Paid distributions to Ted Mitchell, the sole beneficiary, of.......... ($ 150,000) REQUIRED: A. What is the estate's accounting income for 2010? B. What is the estate's distributable net income for 2010? C. What is the estate's taxable income for 2010? D. How much and what type of income allocated from the Estate must be reported by Ted Mitchell on his 2010 individual income tax return? E. What is the estate's federal income tax liability for 2010? AC361 - Midterm Exam - FALL 2011- Page #4 Problem #4 - 22 Points: The EN Limited Partnership consists of Eddie Niiya (the general partner) and Joanne Ferris & Lee Duey (the limited partners). Their interests in profits, losses & capital are 30% - Eddie & 50% - Joanne & 20% Lee Duey. The partnership and partners are on the cash basis, and the pre-closing trial balance with amounts shown at tax basis of the partnership as of 12/31/2010 was as follows: Assets at tax basis (net of accumulated depreciation)......... Debits (Credits) 1,300,000 Recourse loan due to Wells Fargo Bank............................. Nonrecourse loan due to Union Bank................................. (200,000) (350,000) Eddie Niiya (30% GP interest) beginning capital............. Joanne Ferris (50% LP interest) beginning capital.......... Lee Duey (20% LP interest) beginning capital......... Cash drawings during 2010 paid to Eddie.............................. Cash drawings during 2010 paid to Joanne.......................... Cash drawings during 2010 paid to Lee................... Sales for 2010....................................................................... Guaranteed payment to Eddie .................................. Business entertainment expense.......................................... IRC Section 179 expense...................................................... Business rent expense.......................................................... Other business operating expenses............................. Interest income.................................................................... Political contribution to Jerry Brown for Governor.......... Political contribution to Meg Whitman for Governor Charitable contributions to Golden Gate University.......... ( 75,000) (125,000) ( 37,000) 60,000 100,000 40,000 ( 980,000) 50,000 24,000 50,000 90,000 33,000 ( 6,000) 8,000 8,000 10,000 Trial balance totals................................................. -0- REQUIRED: A. B. C. D. E, What is the partnership's ordinary income for 2010? How much and what type of income and deductions are allocated to Eddie for2010? What is Eddie's final capital account after \"closing\" as of 31 December 2010? What is Eddie=s basis in the partnership as of 31 December 2010? If Lee were paid $110,000 of cash as a LIQUIDATING DISTRIBUTION on 12/31/2010, how much income or loss, if any, would she RECOGNIZE on the liquidating distribution? AC 361 - Midterm Exam - FALL 2011 - Page #5 Problem #5 - 18 Points: The trial balance of the JK partnership as of 12/31/2010 is shown below: Dr (Cr) Dr (Cr) Tax Basis Market Values Cash.............................................................. 10,000 10,000 Accounts receivable..................................... 0 100,000 Computer equipment which cost $140,000 on which $110,000 of depreciation had properly been claimed............................... 30,000 90,000 Land held for investment.............................. 20,000 200,000 ( 50,000) ( 50,000) James Smith, 30% general partner........ 3,000 (105,000) Kevin Larkin, 70% general partner.............. 7,000 (245,000) Recourse mortgage (from 1995) to Union Bank Ordinary P&L for 2010.............................. Trial balance totals.............................. (20,000) -0- N/A -0- REQUIRED: A. What is James's basis in the partnership as of 12/31/2010? B. What is Kevin's basis in the partnership as of 12/31/2010? C. If James were to sell his partnership interest for $102,000 in cash, how much and what type of gain or loss would he have on the all 2010 transactions including the sale? Problem #6 - 9 Points (3 points per question): A. The trustee of the Epsilon Trust distributed an asset to Telly, a qualifying income beneficiary. The asset's basis to the trust was $10,000, and its fair market value on the distribution date was $50,000. Which of the following statements is true? a. Lacking any election by the trustee, the trust recognizes $40,000 gross income on the distribution. b. Lacking any election by the trustee, Telly's basis in the asset is $10,000. c. Lacking any election by the trustee, Telly's basis in the asset is stepped up to $50,000. d. Assuming that the trustee made an election under 643(e), the trust is allowed a $10,000 distribution deduction for this transaction. e. Assuming that the trustee made an election under 643(e), Telly recognizes $10,000 gross income on the distribution. B. Beneficiary Terry received $40,000 from the Urgent Trust. Trust accounting income for the year was $100,000. The trust generated $30,000 in cost recovery deductions. How much can Terry deduct with respect to the cost recovery deductions that Urgent generated? a. b. c. d. e. C. $30,000. $18,000. $12,000. $0. Some other amount. The accrual basis taxpayer sold land for $100,000 on December 31, 2010. He did not collect the $100,000 until January 2, 2011. The land was held as an investment. a. If the accrual basis taxpayer's basis in the land was $110,000, the loss would be recognized in 2010. b. If the accrual basis taxpayer's basis in the land was $40,000, the gain must be reported in 2010. c. If the accrual basis taxpayer's basis in the land was $40,000, the gain must be reported in 2011, unless the taxpayer elects to not use the installment method. d. The accrual basis taxpayer must recognize the gain or loss in the year of sale. e. None of the above