QUESTION 13 Questions 12-13 use the following Common Fact Pattern: Allen and Barbara, two equal partners that share profits and losses equally, own an LLC called All-Baba, LLC that is taxed as a partnership. The Schedule K for the partnership reflects $300,000 of ordinary business income, S150,000 of guaranteed payments, and $100,000 of Net Long Term Capital Gain. Allen's K-1, he receives $150,000 of ordinary income, $50,000 of guaranteed payments, and $75,000 of Net Long Term Capital Gain. Question: With respect to Allen's allocation of the LLC's long term capital gain, which of the following is accurate The partnership agreement must allocate 75% of the profits to Allen The partnership likely sold an asset contributed by Allen that had a built-in gain of $50,000. The long term capital gain must have been from an asset encumbered with a debt personally guaranteed by Allen up to $50,000. The asset sold must have been a short term asset when it was contributed, but became a long term asset when it was held in the corporation QUESTION 12 Questions 12-13 use the following Common Fact Pattern: Allen and Barbara, two equal partners that share profits and losses equally, own an LLC called All-Baba, LLC that is taxed as a partnership. The Schedule K for the partnership reflects $300,000 of ordinary business incomo, $150,000 of guaranteed payments, and $100,000 of Net Long Term Capital Gain. Allen's K-1, he receives $150,000 of ordinary income, $50,000 of guaranteed payments, and $75,000 of Net Long Term Capital Gain. Question: If the LLC made no guaranteed payments during the year to any partners, what effect would this have on the company's Ordinary Business Income? Ordinary Business Income would increase by $50,000. Ordinary Business Income would increase by $150,000. Ordinary Business Income would be unaffected. Ordinary Business Income would decrease by $100,000 QUESTION 9 Larry owns an interest in a tax partnership. It he receives a distribution from the partnership under what circumstance would Larry typically recognize a gain from that distribution? If the partnership distributes an asset with an inside basis that is lower than the fair market value of that asset; If the distribution is in liquidation of the partnership: o If Larry receives a cash distribution that exceeds his outside basis; If the partnership distributes an asset with an inside basis that is higher than the falr market value of that asset; QUESTION 10 Which statement is incorrect with respect to the number-of-shareholders test in filing an Selection? Husband and wife count as one shareholder Grandmother and granddaughter count as one shareholder. An engaged couple counts as one shareholder. Husband and the estate of wife count as one shareholder