Q 1 In which situation are partnership expenses not deductible on the partner's personal tax return?

a. If it is a long-standing practice for the partner to not be reimbursed for certain partnership expenses and to instead deduct these unreimbursed partnership expenses on the partner's personal tax retu

b. If the partnership would have reimbursed the partner, but the partner chose not to submit for reimbursement.

c. If the partnership agreement states that a partner will not be reimbursed for certain partnership expenses.

d. If the partner documented the expenses and the policy of the partnership is to not reimburse the expenses documented.

Q2 All of the following are important reasons to keep good records of a shareholder's basis in an S Corporation except:

a. Limits the amount of S corporation loss deductible by the shareholder.

b. To determine the amount of tax-free distributions.

c. To determine the gain or loss on sale of stock.

d. To calculate the fair market value of the S corporation.

Q3 Which of the following is a correct determination of initial basis in an S corporation?

a. If received as a gift, then the FMV at the date of the gift.

b. If received for services rendered, then the basis of the stock is transferred to the recipient.

c. If directly purchased, then the amount paid for the stock.

d. If inherited, then the basis when originally purchased