Multiple choice
1. On January 1, 2011, Connie, Jill, and Hillary , formed a three-person equal partnership with Connie and Jill each contributing $100,000 and Hillary contributing securities with an adjusted basis to her of $60,000 and a fair market value of $100,000. On September 30, 2011, the partnership sold the securities for $130,000. How much gain was required to be allocated to Hillary as a result of the sale by the partnership?
A. $30,000.
B. $40,000.
C. $50,000.
D. $70,000.
2. Ronald and Roy formed an equal partnership, R&R Partnership, a general partnership, on January 1, 2011. Ronald contributed $100,000 in exchange for his one-half interest in R&R partnership. Roy contributed land worth $100,000 and with an adjusted basis to Roy of $30,000 in exchange for his one-half interest in the partnership. Roy is a real estate developer, and at the time of the contribution, the land was inventory in his hands. The land is a capital asset in the hands of R&R Partnership. If R&R Partnership sells the land in 2017 to an unrelated taxpayer for $180,000, how much gain will be recognized by R&R Partnership and what will be the character of the gain?
A. $80,000, all of which gain will be ordinary income
B. $150,000,all of which gain will be capital gain.
C. $150,000,all of which gain will be ordinary income.
D. $150,000, consisting of $80,000 capital gain and $70,000 ordinary income.
4. What is Margaret’s adjusted basis in her partnership interest in MP Partnership at the end of 2011?
A. 0.
B. $1,300.
C. $9,000.
D. $2,700.
Glenda received a proportionate non liquidating distribution from the EFG Partnership. The distribution consisted of $10,000 cash and property with an adjusted basis to the partnership of $34,000 and a fair market value of $42,000. Immediately before the distribution, Glenda’s adjusted basis in her partnership interest was $60,000. How much is Glenda’s basis in the non cash property distributed to her?
A. $10,000.
B. $34,000.
C. $42,000.
D. $50,000.
