Q1. In the current year, the CAR Partnership received revenues of $200,000 and paid the following amounts: $120,000 in rent, utilities, and salaries; a $20,000 guaranteed payment to partner Ronald; $12,000 to partner Albert for consulting services; and a $15,000 distribution to 25% partner Celia. In addition, the partnership realized a $10,000 net long-term capital gain. Celia's basis in her partnership interest was $50,000 at the beginning of the year, and included her $20,000 share of partnership liabilities. At the end of the year, her share of partnership liabilities was $15,000. How much income must Celia report for the tax year, and what is her basis in the partnership interest at the end of the year?
a. $22,500 ordinary income; $67,500 basis.
b. $20,000 ordinary income; $2,500 LTCG; $52,500 basis.
c. $14,500 ordinary income; $64,500 basis.
d. $12,000 ordinary income; $2,500 LTCG; $44,500 basis.
Q2. John transfers property with a tax basis of $200 and a fair market value of $300 to a corporation in exchange for stock with a fair market value of $250 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $50 on the property transferred. What is the corporation's tax basis in the property received in the exchange?
a. $150
b. $200
c. $250
d. $300
Q3. Jasmie transfers property with a tax basis of $500 and a fair market value of $600 to a corporation in exchange for stock with a fair market value of $550 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $50 on the property transferred. What is Jasmie's tax basis in the stock received in the exchange?
a. $550
b. $500
c. $450
d. $600
Q3. Stephanie transfers property with a tax basis of $800 and a fair market value of $1,200 to a corporation in exchange for stock with a fair market value of $850 and $350 in a transaction that qualifies for deferral under section 351. Stephanie also incurred selling expenses of $100. What is the amount realized by Stephanie in the exchange?
a. $750
b. $850
c. $1,100
d. $1,200
Q4. Tom transfers property with a tax basis of $500 and a fair market value of $800 to a corporation in exchange for stock with a fair market value of $650 and $50 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $100 on the property transferred. What is the corporation's tax basis in the property received in the exchange?
a. $550
b. $450
c. $800
d. $600
Q5. Precious transfers property with a tax basis of $800 and a fair market value of $500 to a corporation in exchange for stock with a fair market value of $400 and $50 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $50 on the property transferred. What is Precious's tax basis in the stock received in the exchange?
a. $750
b. $700
c. $800
d. $500
Q6. 16-37. Keith transfers property with a tax basis of $2,000 and a fair market value of $5,000 to a corporation in exchange for stock with a fair market value of $4,000 and $400 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $600 on the property transferred. Keith also incurred selling expenses of $300. What is the amount realized by Keith in the exchange?
a. $5,000
b. $4,200
c. $4,600
d. $4,700
Q7. Larry transfers property with a tax basis of $900 and a fair market value of $1,200 to a corporation in exchange for stock with a fair market value of $900 and $200 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $100 on the property transferred. What is the corporation's tax basis in the property received in the exchange?
a. $900
b. $1,200
c. $1,000
d. $1,100
Q8. Phil transfers property with a tax basis of $5,000 and a fair market value of $6,000 to a corporation in exchange for stock with a fair market value of $3,000 and $2,000 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $1,000 on the property transferred. What is Phil's tax basis in the stock received in the exchange?
a. $4,000
b. $5,000
c. $3,000
d. $6,000
Q9. Sarah transfers property with a tax basis of $5,000 and a fair market value of $3,000 to a corporation in exchange for stock with a fair market value of $2,000 and $500 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $500 on the property transferred. What is Sarah's tax basis in the stock received in the exchange?
a. $5,000
b. $4,000
c. $2,000
d. $3,000
Q10. Raymond transfers property with a tax basis of $800 and a fair market value of $900 to a corporation in exchange for stock with a fair market value of $750 and $50 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $100 on the property transferred. What is Raymond's tax basis in the stock received in the exchange?
a. $750
b. $900
c. $850
d. $700
b. $900