Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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Question
Chapter 10, Problem 23MCQ
To determine
Introduction:
To choose: The difference between partnership and an LLC.
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Students have asked these similar questions
In a general professional partnership (GPP):
The GPP shall report total taxable income
The GPP shall be taxed on its income in the same manner as corporate taxpayers
The partners are not liable for taxes on income withdrawn from the partnership
None of the above
Which of the following statements regarding partnerships is true? a. Partnership income is taxed in the partnership. b. Partnership losses cannot be offset against the partners other income c. Partnership income is included in a partners income in the year of disbursement. d. Partnerships may earn business income, property income, and capital gains.
Which of the following regarding partnership taxation is INCORRECT?
Question 16 options:
A partnership is a tax paying entity for Federal income tax purposes.
Partnership income is comprised of ordinary partnership income or loss and separately stated items
A partnership is required to file a return with the IRS.
A partner’s profit-sharing percent may differ from the partner’s loss-sharing percent.
All of these statements are correct.
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 may not be treated as a partnership for tax purposes? Arnold and Willis operate a restaurant. Thelma and Louise establish an LLP to operate an accounting practice. Lucy and Desi purchase real estate together as a business. Jennifer and Ben form a corporation to purchase and operate a hardware store. All of the above are partnerships.arrow_forwardWhen a partnership is liquidated, any gains or losses realized by the sale of noncash assets are allocated to the partners based on their income sharing ratio. Why?arrow_forwardWhich one of the following statements regarding partnership taxation is incorrect? a.Partnership income is comprised of ordinary partnership income or loss and separately stated items. b.A partnership is required to file a return with the IRS. c.A partner's profit-sharing percentage may differ from the partner's loss-sharing percentage. d.A partnership is a tax-paying entity for Federal income tax purposes.arrow_forward
- The General Partnership form of organization is subject to tax at the business level and again at the ownership level after profits are distributed to the General Partners. Select one: O True Falsearrow_forwardMa1. response to the classmate, Amanda Cain, Partnerships are considered flow-through entities meaning, each partner of the business is responsible to pay taxes on their share of the business’s profit/losses. The amount paid on profit/losses is determined by each partner’s investment share of the business. If the business suffers a loss the partners would each take ownership of the amount on their personal income tax rather thank through the partnership as it is not a taxable entity. The same goes for profits, if the business earns a profit each partner must pay taxes on their share. Basic tax filing requirements of a partnership is 1.) file an information return using Form 1065 annually with the IRS and 2.) each of the partners will be required to file an individual income tax return using Form 1040 in addition to Form 1065. The Form 1065 is used to disclose the business’s income/loss and provide a breakdown of how much each of the partners have earned from their share of profit…arrow_forward1. Which of the following statements concerning partnership is true? a. A partnership is a legal entity separate and distinct from the individual partners. b. Individual partners are jointly liable for the debts and obligation of a partnership. c. Income tax is levied on the individual partners’ shares of net income of a partnership and is reported in their personal tax returns. d. All of the above is true. 2. Under what circumstances can the closing of the income summary account result in a debit to one partners’ capital account and credits to the other partners’ capital accounts? a. The results of operations are divided in a profit and loss ratio and the partnership sustained a loss for the period. b. The results of operations are allocated in a profit and loss ratio and the partnership’s net income was very low. c. The results of operations are divided in the average capital ratio and one partner had a low capital balance.…arrow_forward
- Which of the following statements about partnerships is true? Group of answer choices a)Partnerships must file their tax returns on a calendar year basis. b)No gain or loss is ever recognized in transactions between partners and a partnership. c)Gain is never recognized by a partner on a contribution of property to a partnership. d)A partner's initial basis in a partnership interest is equal to the basis of the property transferred (plus cash contributed) to the partnership, adjusted for any gain recognized on the transfer and reduced for liabilities assumed by the other partners. e)The partnership's basis in property contributed by a partner is equal to the fair market value of the property on the date of the transfer.arrow_forwardIndicate whether the following statements are "True" or "False" regarding self-employment tax and § 1411 tax. a. Self-employment income includes a general partner's distributive share of income from a partnership's trade or business, whether or not that income is distributed. b. For both general and limited partners, any guaranteed payments for services are subject to the self-employment tax. c. Certain types of income allocated from a partnership are treated as net investment income, including dividends, interest, passive income, and gains from property not used in a trade or business. d. A partner's distributive share is not considered net investment income if the partner is a "passive" investor, as defined under § 469.arrow_forwardWhich of the following is a correct definition of a concept related to partnership taxation? A partner's capital-sharing ratio is defined as the percentage of partnership assets (capital) that would be allocated to the partner upon liquidation of the partnership. A special allocation is defined as an amount that could differently affect the tax liabilities of two or more partners. The partnership's outside basis is defined as the sum of each partner's capital account balance. The aggregate concept treats partners and partnerships as separate units and gives the partnership its own tax personality.arrow_forward
- Which statement is true with respect to the tax treatment of a partnership __________? A partnership files an annual information return and the income and expenses associated with the business are reported on the Partners' individual returns. A partnership is required to pay tax annually on its taxable business income A partnership is required to pay tax on gains from the sale of partnership owned assets None of the abovearrow_forwardA partnership * has only one owner. pays taxes on partnership income. must file an information tax return. is not an accounting entity for financial reporting purposes.arrow_forwardSelect the best answer. Which of the following statements is false related to a partnership? O O O A. Most states do not tax the partnerships but rather the partners. Most states tax non-resident partners on their share of the income generated by the B. partnership within the state even though the non-resident partner is not otherwise subject to that state's income tax. C. Publicly traded partnerships are taxed as corporations by some states, such as California. Under federal tax law for limited partnerships, the limited partners but not the general partners are subject to the pass-through provisions. O D. nQ 12 Submit Answers 100% Completearrow_forward
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