Please answer all. Thanks in advance

#1. Tom and William are equal partners in the TW Partnership. Just before TW liquidated, Tom's 704(b) book capital account balance was $50,000 and William's 704(b) book capital account balance was $30,000. To meet the substantial economic effect requirements, any liquidating cash distribution must be allocated in proportion to those ending capital account balances. a) True

b) False #2. ACME Partnership, a consulting firm, has had the following gross receipts since its formation: $22,800,000 in year 1, $24,600,000 in year 2, $33,800,000 in year 3 and $31,700,000 in year 4. ACME is not a tax shelter. Assume the gross receipts threshold for Year 3 is $25,000,000 and Year 4 is $27,000,000. In which tax years must ACME start using the accrual method? a) Year 3 if none of the partners is a C corporation.

b) Year 4 if none of the partners is a C corporation.

c) Year 3 if one of the partners is a C corporation.

d) Year 4 if one of the partners is a C corporation.

#3. Jeremiah received a proportionate nonliquidating distribution of land from the JZ Partnership. The land had a fair market value of $65,000 and a basis to the partnership of $50,000. The land was held for investment purposes by the partnership. Jeremiah's basis in his partnership interest immediately before the distribution was $40,000. The partnership's only remaining assets were cash, another parcel of land, and a building on that land. If the partnership has a 754 election in effect, it will record a $10,000 basis step-up; a portion of the step-up will be allocated to the building and will be depreciated; and the step-up and any related depreciation expense will be allocated among all the partners in the partnership.

a) True

b) False

#4. In a proportionate liquidating distribution, WYX Partnership distributes to partner William cash of $40,000, cash basis accounts receivable (basis of $0, fair market value of $10,000), and land (basis of $30,000, fair market value of $50,000). William's basis was $80,000 before the distribution. On the liquidation, William recognizes a $20,000 gain, and he takes a basis of $10,000 in the accounts receivable and $50,000 in the land.

a) True

b) False

#5. Pepper, Inc., an S corporation, holds a $1 million balance in accumulated E&P. It reports sales revenues of $400,000, taxable interest of $380,000, operating expenses of $250,000, and deductions attributable to the interest income of $140,000. What is Pepper's passive income penalty tax payable, if any?

a) $380,000

b) $116,842

c) $24,537

d) $-0-