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9. Terry transfers two assets to a partnership on the day it's created for a 60% partnership interest worth $12 contributed cash = $80,000 and equipment worth $40,000 with an adjusted basis = $16,000. What result? a. Terry realizes and recognizes a $24,000 gain c. Terry realizes but does not recognize a $24,000 ga Terry neither realizes nor recognizes any gain Terry does not realize but may elect to recognize a gain 10. In the preceding question, if the basis of the equipment is $50,000: a. Terry neither realizes nor recognizes any loss c. b. Terry realizes but does not recognize a $10,000 loss d. b. d. Terry realizes and recognizes a $10,000 loss None of the above

9. Terry transfers two assets to a partnership on the day it's created for a 60% partnership interest worth $12 contributed cash = $80,000 and equipment worth $40,000 with an adjusted basis = $16,000. What result? a. Terry realizes and recognizes a $24,000 gain c. Terry realizes but does not recognize a $24,000 ga Terry neither realizes nor recognizes any gain Terry does not realize but may elect to recognize a gain 10. In the preceding question, if the basis of the equipment is $50,000: a. Terry neither realizes nor recognizes any loss c. b. Terry realizes but does not recognize a $10,000 loss d. b. d. Terry realizes and recognizes a $10,000 loss None of the above

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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9. Terry transfers two assets to a partnership on the day it's created for a 60% partnership interest worth $120,000. She contributed cash = $80,000 and equipment worth $40,000 with an adjusted basis = $16,000. What result? a. Terry realizes and recognizes a $24,000 gain Terry realizes but does not recognize a $24,000 gain Terry neither realizes nor recognizes any gain Terry does not realize but may elect to recognize a $24,000 gain 10. In the preceding question, if the basis of the equipment is $50,000: b. a. Terry neither realizes nor recognizes any loss b. Terry realizes but does not recognize a $10,000 loss d. a. C. a. d. 11. P is allocated his distributive share of a partnership's ordinary income. The effect of this is: To decrease P's outside basis C. To increase P's outside basis b. To increase P's inside basis d. To trigger double taxation of those earnings a. 12. PX partnership has taken out a new loan of which 50% is allocated to partner P as his share. The effect of this is: To increase P's outside basis C. To decrease P's outside basis b. To increase P's inside basis d. To decrease P's inside basis 13. On 1/1 of the current year, B's basis in his partnership interest = $64,000. He "materially participates" in the business of the partnership. On 12/1, B receives $2,000 cash distribution. His distributive share of long-term capital gain = $8,000 and of the partnership's ordinary loss = $86,000. B can deduct what portion of the loss in the current year? $86,000 C. $72,000 b. $64,000 d. $70,000 a. C. 14. Refer to the preceding question. If in the following year, B's share of a net short-term capital gain is $5,000 and of ordinary income is $28,000, B: Cannot deduct any loss that may be carried over from the prior year Terry realizes and recognizes a $10,000 loss None of the above b. Can deduct any loss that may be carried over from the prior year C. Has a remaining outside basis at the end of the following year = $17,000 d. (b) and (c)
Transcribed Image Text:9. Terry transfers two assets to a partnership on the day it's created for a 60% partnership interest worth $120,000. She contributed cash = $80,000 and equipment worth $40,000 with an adjusted basis = $16,000. What result? a. Terry realizes and recognizes a $24,000 gain Terry realizes but does not recognize a $24,000 gain Terry neither realizes nor recognizes any gain Terry does not realize but may elect to recognize a $24,000 gain 10. In the preceding question, if the basis of the equipment is $50,000: b. a. Terry neither realizes nor recognizes any loss b. Terry realizes but does not recognize a $10,000 loss d. a. C. a. d. 11. P is allocated his distributive share of a partnership's ordinary income. The effect of this is: To decrease P's outside basis C. To increase P's outside basis b. To increase P's inside basis d. To trigger double taxation of those earnings a. 12. PX partnership has taken out a new loan of which 50% is allocated to partner P as his share. The effect of this is: To increase P's outside basis C. To decrease P's outside basis b. To increase P's inside basis d. To decrease P's inside basis 13. On 1/1 of the current year, B's basis in his partnership interest = $64,000. He "materially participates" in the business of the partnership. On 12/1, B receives $2,000 cash distribution. His distributive share of long-term capital gain = $8,000 and of the partnership's ordinary loss = $86,000. B can deduct what portion of the loss in the current year? $86,000 C. $72,000 b. $64,000 d. $70,000 a. C. 14. Refer to the preceding question. If in the following year, B's share of a net short-term capital gain is $5,000 and of ordinary income is $28,000, B: Cannot deduct any loss that may be carried over from the prior year Terry realizes and recognizes a $10,000 loss None of the above b. Can deduct any loss that may be carried over from the prior year C. Has a remaining outside basis at the end of the following year = $17,000 d. (b) and (c)
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