Match Each of the Following Statements with the Terms Below

question 70

Multiple Choice

Match each of the following statements with the terms below that provide the best definition.
-Economic effect test

• A)Adjusted basis of each partnership asset.
• B)Operating expenses incurred after entity is formed but before it begins doing business.
• C)Each partner's basis in the partnership.
• D)Reconciles book income to taxable income.
• E)Tax accounting election made by partnership.
• F)Tax accounting calculation made by partner.
• G)Tax accounting election made by partner.
• H)Does not include liabilities.
• I)Designed to prevent excessive deferral of taxation of partnership income.
• J)Amount that may be received by partner for performance of services for the partnership.
• K)Theory under which a partnership's recourse debt is shared among the partners.
• L)Will eventually be allocated to partner making tax-free property contribution to partnership.
• M)Partner's share of partnership items.
• N)Must generally be satisfied by any allocation to the partners.
• O)Justification for a tax year other than the required taxable year.
• P)No correct match is provided.

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Definitions:

Limited Liability Company

A firm's structure that integrates the aspect of limited liability similar to a corporation with the pass-through tax benefit akin to that of a partnership or sole proprietorship.

Corporate Veil

A legal concept that separates the actions and liabilities of a corporation from its shareholders, protecting them from personal liability.

Syndicate

A group of individuals or firms that join together to finance a project; also called an investment group.

Corporation

A legal entity that is separate from its owners, offering limited liability to its shareholders, and able to own property, enter contracts, and sue or be sued.