Question-1

Bruce owns a commercial building which he leases to an unrelated S Corporation. To qualify for the real property business exception for rental activities

A. Bruce must materially participate for at least 500 hours.

B. Bruce must materially participate for at least 750 hours.

C. Bruce and spouse must materially participate for at least 1000 hours.

D. Half of Bruces time must be spent in the activity and must equal at least 500 hours in the activity.

Question-2

Susan is a Partner in a business which publishes college textbooks. When would Susan recognize gain on a partnership distribution?

A. In a liquidating distribution when the fair market value of the property received exceeds partnership interest basis.

B. In a nonliquidating distribution and the cash received exceeds the basis of the partnership interest.

C. In a nonliquidating distribution and the property received exceeds the fair market value of the partnership interest.

D. Gain is not recognized until the property received for the partnership interest is sold.