Question

If the basis of a partnership interest is exhausted, a partner can use loans made to the partnership to absorb excess losses.

True

False

Jordan and his two brothers are equal owners in Taupe Partnership. If Jordan sells business property (basis of $230,000; fair market value of $280,000) to Taupe for $280,000, he must recognize the $50,000 realized gain.

True

False

Guaranteed payments are deductible by the partnership and are taxable to the partner receiving the payments.

True

False

Guaranteed payments have no direct effect on the basis of a partner's interest in the partnership.

True

False

Answer 1

Answer:-

(1) :-

If the basis of a partnership interest is exhausted, a partner can use loans made to the partnership to absorb excess losses.

The given statement is false( only for S corp).

So the answer is False.

(2) :-

Jordan and his two brothers are equal owners in Taupe Partnership. If Jordan sells business property (basis of $230,000; fair market value of $280,000) to Taupe for $280,000, he must recognize the $50,000 realized gain.

Correct answer is True.

(3):-

Guaranteed payments are deductible by the partnership and are taxable to the partner receiving the payments.

Correct answer is True.

(4):-

Guaranteed payments have no direct effect on the basis of a partner's interest in the partnership.

Correct answer is True.