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Business Tax Test 4 TEST FINAL EXAM AND PRACTICE EXAM
2026-2027 BANK 2 VERSIONS QUESTIONS WITH DETAILED
VERIFIED ANSWERS EXAM QUESTIONS WILL COME
FROM HERE (100% CORRECT ANSWERS A+ GRADED
Unrealized receivables include accounts receivable for which of the
following partnerships?
Multiple Choice
Accrual-method partnerships
Cash-method partnerships
Neither cash- nor accrual-method partnerships
Both cash- and accrual-method partnerships - ANSWERS--Neither cash-
nor accrual-method partnerships
Jackson is a 30 percent partner in the JJM Partnership when he sells his
entire interest to Rhonda for $112,000 cash. At the time of the sale,
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Jackson's basis in JJM is $64,000. JJM does not have any debt or hot
assets. What is Jackson's gain or loss on the sale of his interest?
Multiple Choice
$48,000 capital gain
$48,000 ordinary income
$24,000 capital gain and $24,000 ordinary income
Gain or loss cannot be determined. - ANSWERS--$48,000 ordinary
income
Which of the following statements regarding the sale of a partnership
interest is false?
Multiple Choice
The seller's primary tax concern in a partnership interest sale is
calculating the amount and character of gain or loss on the sale.
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The selling partner determines the gain or loss as the difference
between the amount realized and her outside basis in the partnership.
Hot assets change the character of a gain on the sale from ordinary
income to capital gain.
Any debt relief increases the amount the partner realizes from the sale.
- ANSWERS--Any debt relief increases the amount the partner realizes
from the sale.
At the end of last year, Cynthia, a 20 percent partner in the five-person
CYG partnership, has an outside basis of $34,000, including her $21,000
share of CYG debt. On January 1 of the current year, Cynthia sells her
partnership interest to Roger for a cash payment of $24,500 and the
assumption of her share of CYG's debt. CYG has no hot assets. What is
the amount and character of Cynthia's recognized gain or loss on the
sale?
Multiple Choice
$9,500 capital loss
$9,500 ordinary loss
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$11,500 capital gain
$3,500 ordinary income - ANSWERS--$11,500 capital gain
Which of the following assets would not be classified as a hot asset?
Multiple Choice
Inventory
Depreciation recapture
Cash
Accounts receivable for a cash-method taxpayer - ANSWERS--Cash
The SSC, a cash-method partnership, has a balance sheet that includes
the following assets on December 31 of the current year:
BasisFMVCash$ 180,000$ 180,000Accounts
receivable060,000Land90,000120,000Total$ 270,000$ 360,000
Susan, a one-third partner, has an adjusted basis of $90,000 for her
partnership interest. If Susan sells her entire partnership interest to
Business Tax Test 4 TEST FINAL EXAM AND PRACTICE EXAM
2026-2027 BANK 2 VERSIONS QUESTIONS WITH DETAILED
VERIFIED ANSWERS EXAM QUESTIONS WILL COME
FROM HERE (100% CORRECT ANSWERS A+ GRADED
Unrealized receivables include accounts receivable for which of the
following partnerships?
Multiple Choice
Accrual-method partnerships
Cash-method partnerships
Neither cash- nor accrual-method partnerships
Both cash- and accrual-method partnerships - ANSWERS--Neither cash-
nor accrual-method partnerships
Jackson is a 30 percent partner in the JJM Partnership when he sells his
entire interest to Rhonda for $112,000 cash. At the time of the sale,
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Jackson's basis in JJM is $64,000. JJM does not have any debt or hot
assets. What is Jackson's gain or loss on the sale of his interest?
Multiple Choice
$48,000 capital gain
$48,000 ordinary income
$24,000 capital gain and $24,000 ordinary income
Gain or loss cannot be determined. - ANSWERS--$48,000 ordinary
income
Which of the following statements regarding the sale of a partnership
interest is false?
Multiple Choice
The seller's primary tax concern in a partnership interest sale is
calculating the amount and character of gain or loss on the sale.
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The selling partner determines the gain or loss as the difference
between the amount realized and her outside basis in the partnership.
Hot assets change the character of a gain on the sale from ordinary
income to capital gain.
Any debt relief increases the amount the partner realizes from the sale.
- ANSWERS--Any debt relief increases the amount the partner realizes
from the sale.
At the end of last year, Cynthia, a 20 percent partner in the five-person
CYG partnership, has an outside basis of $34,000, including her $21,000
share of CYG debt. On January 1 of the current year, Cynthia sells her
partnership interest to Roger for a cash payment of $24,500 and the
assumption of her share of CYG's debt. CYG has no hot assets. What is
the amount and character of Cynthia's recognized gain or loss on the
sale?
Multiple Choice
$9,500 capital loss
$9,500 ordinary loss
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$11,500 capital gain
$3,500 ordinary income - ANSWERS--$11,500 capital gain
Which of the following assets would not be classified as a hot asset?
Multiple Choice
Inventory
Depreciation recapture
Cash
Accounts receivable for a cash-method taxpayer - ANSWERS--Cash
The SSC, a cash-method partnership, has a balance sheet that includes
the following assets on December 31 of the current year:
BasisFMVCash$ 180,000$ 180,000Accounts
receivable060,000Land90,000120,000Total$ 270,000$ 360,000
Susan, a one-third partner, has an adjusted basis of $90,000 for her
partnership interest. If Susan sells her entire partnership interest to
