Taxation - True or False

1. As a general rule all of the liabilities of a partnership, including those assumed from a partner, are shared among the partners for purposes of determining outside basis.

2. Partnership liability is recourse to the extent that no partner has personal liability for repayment.

3. If a shareholder owns, directly or indirectly, 35 percent of the FMV of the outstanding stock of a corporation, he and the corporation are related parties.

4. The gain recognized from the sale or exchange of depreciable property by a shareholder to a related corporation is capital gain.

5. Defined benefit plans do NOT provide employees with a targeted amount of future income.

6. Employer contributions to qualified retirement plans are deductible when made.

7. Members of a limited liability company who want to provide a qualified retirement plan for both themselves and their employees can use a Keogh Plan.

8. The tax law imposes a 20 percent penalty on withdrawals made before the employee reaches age 59½.

9. The difference between the FMV and adjusted basis of contributed property is its built-in gain or loss.

10. Roger contributed a parcel of land with FMV of $70,000 (adjusted basis of $40,000) to the RST partnership. His capital account was credited with $40,000.

11. Roger contributed a parcel of land with FMV of $70,000 (adjusted basis of $40,000) to the M&M partnership. When the land is sold he should be allocated the first $30,000 of gain.

12. Roger contributed a parcel of land with FMV of $70,000 (adjusted basis of $40,000) to the M&M partnership. If the partnership sells the land for $60,000, Roger must be allocated all $20,000 tax gain under the traditional method.

13. Harbor Corporation, which has assets with a total tax basis of $1,000,000 and a FMV of $3,000,000, merges into Artistic Corporation is a tax-deferred Type A merger. Artistic takes a tax basis of $1,000,000 in the assets.