1. The Rainy Day Partnership reported a Sec. 1231 gain of $30,000, a long-term capital loss of $33,000, a $400 charitable contribution, and ordinary income of $40,000 for the current year. Mr. Umbrella, a single taxpayer with no dependents, owned a 40% profit and loss interest in the partnership. Umbrella had a $2,000 long-term capital gain and $30,000 ordinary income but no Sec. 1231 transactions, charitable contributions, or short-term capital gains or losses before considering the partnership results. Umbrella had itemized deductions from AGI of $12,500 without considering partnership results. He has no dependents. Umbrella’s taxable income for the current year was

2. Dianne owns 10% interest in DJJ Partnership and 20% of the outstanding stock of PAD Corporation. Her son, Nick, owns 60% of the outstanding shares of PAD Corporation. The PAD Corporation owns 50% interest in the DJJ Partnership. Dianne’s sister, Dolores, owns 40% interest in the DJJ Partnership. Using the constructive ownership rules for partnerships, Dianne is considered to own how much of DJJ Partnership?

3. On August 1 of the current year, George Hart, Jr., acquired a 25% interest in the Wilson, Hart, and Company partnership by gift from his father. The partnership interest had been acquired by a $50,000 cash investment by Hart, Sr., 20 years ago. The basis of Hart, Sr.’s partnership interest was $60,000 at the time of the gift. No gift tax was paid. Hart, Jr., sold the 25% partnership interest for $85,000 on December 17 of this year. What type and amount of gain should Hart, Jr., report on his current-year tax return?

4. Betty contributed land with a $6,000 basis and a $10,000 FMV to the ABC Partnership in Year 1. In Year 2, the land was distributed to Sally, another partner in the partnership. At the time of the distribution, the land had a $12,000 fair market value, and Sally had a $30,000 basis for her partnership interest. What gain is recognized by Betty on the distribution? What is Sally’s basis for the distributed land?

Answer rating: 100% (QA)

a Dianne is considered to own 10 of DJ J Partnership because she owns 20 of the outstanding stock of ... View the full answer