Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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Question
Chapter 10, Problem 15MCQ
To determine
Introduction:
To choose: The situation in which a partnership will not close its tax year early.
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Students have asked these similar questions
Moe, Edita, and Hunter have been operating a business together as partners without a partnership agreement for several years. Hunter unexpectedly passes away, what will most likely become of the partnership?
A. The partnership will be immediately dissolved
B. Hunter’s interest will automatically be divided between Moe and Edita
C. Moe and Edita will need to find a new partner to take Hunter’s place
D. Moe and Edita will be able to purchase Hunter’s interest from his estate
A partner who retires voluntarily from the partnership is not entitled to profit share for that year.
A) True
B) False
Karla retires from Orton Associates, a partnership. The business is continued by the remaining partners and Wes, a new partner who has agreed to assume Karla's liability for partnership obligations. Creditors have not been notified of Karla's retirement. What are Karla and Wes's liabilities to the creditors?
Chapter 10 Solutions
Income Tax Fundamentals 2020
Ch. 10 - Which of the following may not be treated as a...Ch. 10 - Prob. 2MCQCh. 10 - Prob. 3MCQCh. 10 - Prob. 4MCQCh. 10 - Prob. 5MCQCh. 10 - Prob. 6MCQCh. 10 - Abigail contributes land with an adjusted basis of...Ch. 10 - Prob. 8MCQCh. 10 - Prob. 9MCQCh. 10 - Prob. 10MCQ
Ch. 10 - Prob. 11MCQCh. 10 - Prob. 12MCQCh. 10 - Prob. 13MCQCh. 10 - Prob. 14MCQCh. 10 - Prob. 15MCQCh. 10 - Prob. 16MCQCh. 10 - Kendra is an attorney and owns 60 percent of a law...Ch. 10 - Prob. 18MCQCh. 10 - In 2019, Gloria, a single taxpayer, receives a...Ch. 10 - Prob. 20MCQCh. 10 - Prob. 21MCQCh. 10 - Prob. 22MCQCh. 10 - Prob. 23MCQCh. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 9PCh. 10 - Prob. 10PCh. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 16P
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- Which of the following transactions or events does not affect the total assets of a partnership? An old partner retires and his capital balance is settled by the partnership at a lower amount. A partnership is dissolved and its assets and liabilities are revalued to fair value. An incoming partner purchases interest from an existing partner. A new partner is admitted in a partnership when he invested noncash asset to the partnership.arrow_forwardPrior to liquidating their partnership, Sam and Brian had capital accounts of $60,000 and $240,000, respectively. The partnership assets were sold for $120,000. The partnership had no liabilities. Sam and Brian share income and losses equally Determine the amount of Sam’s deficiency. Determine the amount distributed to Brian, assuming Sam is unable to satisfy the deficiency. Show your work:arrow_forwardWhich of the following is true about a partnership? The old partnership ends only upon the withdrawal of a partner. The old partnership ends upon the acceptance of a new partner. If a new partner is admitted to the partnership, the old partnership must liquidate. Partnerships have an unlimited life. Only one owner is allowed in a Partnership.arrow_forward
- When a more than fifty percent (50%) Partner sells his entire interest in a Partnership to an unrelated third party: O The tax year closes with respect to neither that Partner nor the Partnership. O The tax year closes with respect to both that Partng and the Partnership. O The tax year closes with respect to the Partnership only. O The tax year closes with respect to that Partner only.arrow_forwardWhen Billie retired from Billie, Ive, and Fromis partnership, he received cash in excess of his capital account balance. Under the bonus method, the excess received by Billie a. had no effect on the capital account balances of Ive and Fromis. b. was recognized as bonus to the old partners c. reduced the capital account balances of both Ive and Fromis d. was recognized as an operating expense Which of the following will not result in dissolution of a partnership? a. Incapacity of a partner b. admission of a new partner c. bankruptcy of a partner d.. negative capital balance of a partner When a partner retires, the book of the partnership should be adjusted as of a. the date of retirement b. interim report c. the balance sheet date d. all of the abovearrow_forwardWhat is the difference in treatment when an incoming partner purchases an interest by agreeing to perform services for the partnership and the partnership (1) gives a 25 percent interest in the capital of the partnership, (2) gives a 25 percent interest in the future income of the partnership, or (3) gives a 25 percent interest in the partnership's future income which the incoming partner must forfeit if the partnership, as reconstituted after the incoming partner's admission, is unable to earn an average of $100,000 profit for the ensuing five years?arrow_forward
- Grell, Hamilton, Kieffer, and Mally have been operating a consulting business as a partnership. Based on the provisions of the original articles of partnership, all profits and losses have been allocated on a 4:2:2:2 ratio, respectively. The partners have had difficulty agreeing which clients to pursue and decided they could no longer work together. As a result, they decided to liquidate the partnership. They ceased operations on December 31, 2019. The partnership balance sheet reflects the following: GHKM Consulting Balance Sheet December 31, 2019 $ 20,000 Accounts Payable $ 10,000 20,000 95,000 20,000 25,000 30,000 $200,000 Cash Accounts Receivable 100,000 Bank Loan Payable 80,000 Grell, Capital Hamilton, Capital Kieffer, Capital Mally, Capital $200,000 Total Liabilities & Capital Office Furniture, net Total Assets The partnership anticipates they will incur $5,000 of costs to liquidate their noncash assets.arrow_forwardPrior to liquidating their partnership, Bonilla and Perez had capital accounts of $185,000 and $245,000, respectively. The partnership assets were sold for $30,000. The partnership had no liabilities. Bonilla and Perez share income and losses equally.a. Determine the amount of Bonilla’s deficiency.b. Determine the amount distributed to Perez, assuming that Bonilla is unable to satisfy the deficiency.arrow_forwardA and B realized that the partnership is hindering them from starting their respective families. Due to the urgency of the decision, they moved to dissolve the partnership. What kind of dissolution is applied? Judicial None of the above Extrajudicial By operation of lawarrow_forward
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