Taxation

Comment on the validity of each of the following statements.

a. Since a partnership is not a taxable entity, it is not required to file any type of Federal income tax return.

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b. Generally, a transfer of appreciated property to a partnership results in recognized gain to the contributing partner at the time of the transfer.

c. When a partner renders services to the entity in exchange for an unrestricted interest, that partner does not recognize any gross income.

d. Property that was held as inventory by a contributing partner, but is a capital asset in the hands of the partnership, triggers a capital gain if the partnership immediately sells the property.

e. Each partner can choose a different method of accounting and depreciation computation in determining the gross income from the entity.

f. A partnership may choose a year that results in the least aggregate deferral of tax to the partners, unless the IRS requires the use of a natural business year.

g. Built-in loss related to nondepreciable property contributed to a partnership is allocated to the contributing partner to the extent the loss eventually is recognized by the partnership.

h. A partner’s basis in a partnership interest includes that partner’s share of partnership liabilities.

i. A partner can carry forward, for an unlimited period of time, the partner’s share of any partnership operating losses that exceed the partner’s basis in the entity, provided the partner retains an ownership interest in the partnership.

j. Losses on sales between a partner and the partnership always are nondeductible.

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