Answer the 11 questions for the tax accounting, and show your work

  1. Michelle receives a non-liquidating distribution when the outside basis of her partnership interest is $50,000. The distribution consists of $58,000 cash and noninventory property (adjusted basis to the partnership of $10,000 and fair market value of $12,000). The partnership has no hot assets. How much gain or loss does Michelle recognize, and what is her basis in the distributed property?
  a. $0 gain or loss; $10,000 basis in property.
  b. $0 gain or loss; $50,000 basis in property.
  c. $8,000 ordinary income; $0 basis in property.
  d. $8,000 capital gain; $0 basis in property.



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  1. Lisa has been widowed two times. Her first husband died in 2011, leaving a taxable gift amount of $3 million to wife but with no gift tax payment. The second husband died in 2013, leaving the entire $2 million taxable gift to wife but with no gift tax payment. The second give Lisa’s DSUE.  What’s the exemption equivalent available amount upon her death this year is:
  a. $17,180,000
  b. $20,580,000
  c. $22,580,000
  d. $11,400,000

e. 8,180,000




  1. Emma elected as an “S” Corp in 2011. The corporation had operating loss for $50,000 in the first year.  The total net income for the following 6 years was $120,000.  In 2017, it made distributions ($30,000 each) to its 3 equal shareholders.  What’s the balance for AEP account at the end of 2017?
  2. 0
  3. ($20,000)
  4. $90,000
  5. $30,000


  1. Star was a “C” Corp before and elected as a S Corp until 2018. When the Star elected the S Corp, the Corp had asset with FMV of $110,400 (the basis was $50,200). In this year, the asset was sold for $130,800. What’s the result of capital gain tax liability after the sale of the asset?


  1. $12,642
  2. $12,090
  3. $ 0
  4. $16,926


  1. At the time of Leif’s death, his gross estate for Federal Estate Tax equals $13,000,000 (but with no taxable gifts during the lifetime). He has bequeathed $500,000 to his wife and $200,000 to community. The Estate administrative expenses occur $300,000.  Assuming these are all the expenses/transaction associated with his estate, what is the estate tax obligation for the estate?


  1. $275,600
  2. $240,000
  3. $440,000
  4. 0


6.      Ryan is a 25% partner in the ROCC LLC. At the beginning of the tax year, his outside basis in the partnership interest was $20,000. During the current year, ROCC reported net ordinary income of $40,000, Municipal bond interest income $12,000. In addition, ROCC distributed $8,000 cash to Ryan. At the end of the year, the Ryan basis in the LLC interest at the end of the year is:

  a. $30,000.
  b. $25,000.
  c. $23,000.
  d. $15,000.



  1. In 2015, Tim Corp was a “C” Corp, but it elected as “S” Corp in 2019. The only asset is a restaurant with FMV of $11,000,000 when the election of “S”(basis: $5,000,000).  In 2018, the restaurant sold for $15,000,000.  What’s the taxable gain to the corporation? Show your work.



  1. Landis received $20,000 cash, inventory (a basis of $15,000 and a FMV of $20,000) and account receivable (with a basis and FMV of $5,000) in a proportionate liquidating distribution of her LLC interest. Her basis in her partnership interest was $50,000. How much gain or loss does Landis recognize and realized?
  a. $0 recognized and realized loss.
  b. $5,000 realized loss.
  c. $10,000 realized loss.
  d. $10,000 for both realized and recognized loss.

e.       $5,000 for both realized and recognized loss


  1. Before Tom received a current distribution of $20,000 cash, unrealized accounts receivable with a FMV of $10,000 ($0 basis), and real property with a FMV of $50,000 ($40,000 basis). Tom had an adjusted basis in LLC of $50,000.  What’s the basis of his distributed real property? Show your work.


  1. In 2016, Tom surrendered all 2,000 shares he owned in Corporation for $33,000 in complete redemption of his stock interest, leaving his cousin as the sole surviving stockholder. He remained as a director in the corporation.  His basis in his stock was $16,000.  The corporation had accumulated E&P at the beginning of the year of $25,000, and a NOL for the year of $7,000.  What amount of income did Tom recognize from the stock redemption?


  1. $33,000 dividend
  2. $25,000 dividend
  3. $18,000 capital gain
  4. $17,000 capital gain



  1. For the fiscal year ending June 30, 2019 the LLC reports an operating loss for $30,000. Tim is a 10% member of the LLC and has $2,300 basis for the LLC.  How should Tim report the NOL?
  2. $1,500 in 2018 and $1,500 in 2019
  3. $2,300 in 2019
  4. $3,000 in 2019
  5. $1,150 in 2018 and $1,150 in 2019
  6. $3,000 in 2018



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