Question

11. Bread Corporation is a C corporation with earnings of $150,000. It paid $60,000 of dividends to its sole shareholder, Gerald. Gerald also owns 100% of Butter, an S Corporation. Butter had net taxable income of $40,000 and made a $30,000 distribution to Gerald. What total income will Gerald report from Bread and Butter’s activities?
      
$90,000
      
$190,000
      
$150,000
      
$100,000

12. At the first of the year, Arch and Bean contribute cash equally to form the JK partnership. Arch and Bean share profits and losses in a ratio of 75% to 25% respectively. For the current year, the partnership's ordinary income was $40,000. A distribution of $5,000 was made to Arch during the current year. What amount of ordinary income should Bean report from the JK partnership?
      
$5,000
      
$20,000
      
$10,000
  
$40,000

13. Identify which of the following statements is true.
All cash distributions from a partnership require the partners to pay taxes on those distributions.

Distribution of partnership income in the form of cash to partners is generally taxable to the

partners as long as there is sufficient basis.
      
If property distributions exceed the partner's basis in the partnership interest, a partner would not have to recognize gain on a distribution from the partnership.

All of the above are true.

14. Stan had a basis in his 50% partnership interest at the beginning of this year of $20,000 in a partnership in which he actively participates. There was no change in partnership liabilities during the year. The partnership's ordinary loss this year was $60,000 and the partnership had no separately stated items. The deductible loss from the partnership reported on Stan's personal income tax return this year is
      
$20,000

$0

      
$60,000
      
$30,000

15. The Qualified Business Income Deduction applies to individuals who own an interest in a:
      
C Corporation
      
Both a Partnership and an S Corporation
      
A partnership

S Corporation

Answer 1

11. Option D, $60,000 of dividends + $ 40,000 taxable income

12. Option c, 25% of $ 40000 = $ 10000

13. If property distributions exceed the partner's basis in the partnership interest, a partner would not have to recognize gain on a distribution from the partnership.

14. vOption A, $ 20000 limited to the basis in the begining. $ 10000 will be carried over for next year

15. Option B, Both a Partnership and an S Corporation as per  Tax Cuts and Jobs Act: from January 1, 2018