Question

In: Accounting

The Monroe Partnership has two partners – Amy and Claire. Each partner has a 50% interest...

The Monroe Partnership has two partners – Amy and Claire. Each partner has a

50% interest in the partnership. Amy also owns 80% of the stock (80 shares) of the

Zena Corporation. The other 20% (20 shares) of Zena are owned by Wendy who is

not related to Amy or Claire. Based on these facts, the Monroe partnership will be

deemed to own _____________ shares of Zena and Claire will be deemed to own

___________ shares of Zena.

a. 80 shares, 80 shares.

b. 20 shares, 20 shares.

c. 80 shares, 20 shares.

d. 80 shares, zero shares.

e. none of the above.

Erin and Mark are married. Veronica is Mark’s mother. Erin owns 50 shares of stock in the DONAT Corporation. Mark is deemed to own ________________ shares of DONAT Corporation and Veronica is deemed to own ____________________ shares of DONAT Corporation.

a. 50, 50

b. zero, zero

c. zero, 50

d. 50, zero

Which of the following entities can receive sale treatment on a distribution in redemption of their stock when the distribution is considered to be received in partial liquidation?

a. All noncorporate shareholders.

b. All corporate shareholders.

c. Corporate shareholders owning more than 50% of the redeeming corporation’s stock.

d. a and b.

e. a, b, and c.

Solutions

Expert Solution

The Monroe Partnership has two partners – Amy and Claire. Each partner has a

50% interest in the partnership. Amy also owns 80% of the stock (80 shares) of the

Zena Corporation. The other 20% (20 shares) of Zena are owned by Wendy who is

not related to Amy or Claire. Based on these facts, the Monroe partnership will be

deemed to own _____________ shares of Zena and Claire will be deemed to own

___________ shares of Zena.

80 shares, zero shares.

Erin and Mark are married. Veronica is Mark’s mother. Erin owns 50 shares of stock in the DONAT Corporation. Mark is deemed to own ________________ shares of DONAT Corporation and Veronica is deemed to own ____________________ shares of DONAT Corporation.

zero, zero

Which of the following entities can receive sale treatment on a distribution in redemption of their stock when the distribution is considered to be received in partial liquidation?

d. a and b.


Related Solutions

The AC Partnership has two partners - Amanda and Cheryl. Each partner has a 50% interest...
The AC Partnership has two partners - Amanda and Cheryl. Each partner has a 50% interest in the partnership. Amanda also owns 80% (80 shares) of the ZZZ Corporation. The other 20% of ZZZ are owned by Wendy who is not related to Amanda or Cheryl. Based on these facts, the AC partnership will be deemed to own ______ shares of ZZZ and Cheryl will be deemed to own _____ shares of ZZZ. a. 80 shares, 80 shares b. 20...
Partnership P ("P") has two individual partners (A and B). Each are 50% owners in P....
Partnership P ("P") has two individual partners (A and B). Each are 50% owners in P. At the beginning of Year 1, A's outside basis was $1,000 and B's outside basis was $10,000. During Year 1 P earned $2,000 of income from operations, $1,000 of tax exempt income, and paid off $10,000 of a recourse liability. What income, gain or loss, if any, will A report on A's individual income tax return (for Year 1) as a result of being...
Partnership P ("P") has two individual partners (A and B).  Each are 50% owners in P.  At the...
Partnership P ("P") has two individual partners (A and B).  Each are 50% owners in P.  At the beginning of Year 1, A's outside basis was $1,000 and B's outside basis was $10,000.  During Year 1 P earned $2,000 of income from operations, $1,000 of tax exempt income, and paid off $10,000 of a recourse liability.  What income, gain or loss, if any, will A report on A's individual income tax return (for Year 1) as a result of being a partner in P?
A and B are equal partners in a personal services partnership. Each partner acquired her partnership...
A and B are equal partners in a personal services partnership. Each partner acquired her partnership interest for cash several years ago. None of the partnership’s asset sis Section 704(c) property. The partnership has the following balances sheet: Assets Liabilities and Partnerships' Capital A.B. FMV cash        13,000        13,000 Liabilities             2,000 capital assets Capital A.B. FMV collectibles           1,000           3,000 A        10,000          15,000 Other           6,000           2,000 B        10,000          15,000 Subtotal          ...
A and B are equal partners in a personal services partnership. Each partner acquired her partnership...
A and B are equal partners in a personal services partnership. Each partner acquired her partnership interest for cash several years ago. None of the partnership’s assets is Section 704(c) property. The partnership has the following balance sheet: Assets                                                                         Liabilities and Partners’ Capital                         A.B.                 F.M.V.                                                 A.B.*               F.M.V. Cash                $13,000           $12,000                       Liabilities:                               $2,000 Capital Assets:                                                                        Capital: Collectibles     1,000               3,000                           A                      $10,000           15,000 Other               6,000               2,000                           B                      10,000             15,000 Subtotal          7,000               5,000                                                                                       Receivables     0                      14,000                                                ...
33. The ABCD partnership has four partners. Each partner’s adjusted basis in the partnership interest owned...
33. The ABCD partnership has four partners. Each partner’s adjusted basis in the partnership interest owned by that partner was $40,000 on the first day of last year. The partnership reported net income for last year of $80,000 (there were no separately stated items to take into account). The partnership distributed pro rata to each partner $55,000 in cash plus identical parcels of land that each had a fair market value of $25,000 and a basis to the partnership of...
Ms. Kim is a general partner who holds a 50% interest in the Mustang Partnership. This...
Ms. Kim is a general partner who holds a 50% interest in the Mustang Partnership. This year, Mustang earned an ordinary business income of $200,000 before accounting for any payments to partners. Mustang also received $8,000 in qualified dividend income and $3,000 of municipal bond interest income. During the year, Mustang paid Ms. Kim a $60,000 guaranteed payment for services to the partnership plus an additional cash distribution of $30,000(assume Mustang made no payments to any other partner). Ms. Kim’s...
The ABC partnership has three partners, A, B, and C, who each has an equal interest...
The ABC partnership has three partners, A, B, and C, who each has an equal interest in partnership capital, profits, and losses. To pay off expenses incurred by the partnership, C contributed additional capital on October 31 of the current year. As a result of C's contribution, the partners' interests in the partnership capital, profits, and losses changed to 25% for A, 25% for B, and 50% for C. The partnership is an accrual method, calendar year taxpayer. a) If...
Ms. Kim is a general partner who holds a 50% interest in Mustang Partnership. This year,...
Ms. Kim is a general partner who holds a 50% interest in Mustang Partnership. This year, Mustang earned ordinary business income of $200,000 before accounting for any payments to partners. Mustang also received $8,000 in qualified dividend income and $3,000 of municipal bond interest income. During the year, Mustang paid Ms. Kim a $60,000 guaranteed payment for services to the partnership plus an additional cash distribution of $30,000 (assume Mustang made no payments to any other partner). Ms. Kim’s ordinary...
Luis and Jennifer formed the JL Partnership as equal partners. Each partner contributed cash and property...
Luis and Jennifer formed the JL Partnership as equal partners. Each partner contributed cash and property with a value of $80,000 for partnership operations. As a result of these contributions, Luis had a basis of $80,000 and Jennifer a basis of $60,000 in their partnership interests. At the end of their first year of operations, they had the following results: Gross sales $110,000 Cost of goods sold 75,000 Rent expense 18,000 Employees’ salaries 20,000 Utilities 3,000 Charitable contribution 500 Section...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT