Assessment 7: partnership and corporate tax reporting

Complete the problem in the partnership scenario that requires research and analysis as well as computation.

Note: The assessments in this course are presented in a sequence and must be completed in order. Do not complete Assessment 7 until you have submitted and received faculty feedback for Assessment 6.

Introduction

There is a need for other forms of business ownership beyond sole proprietorship. Small businesses can only do so much to provide the public with an array of goods and services that match the public’s insatiable appetite. To this end, large corporate entities are better equipped to provide the required goods and services. Partnerships, in all of their forms, also fill a niche, especially in the area of services, such as legal, health, and welfare.

When it comes to these business entities’ responsibility for reporting their income and deductions, the tax code becomes very complicated. Their tax reporting needs may require the services of certified public accountants, who know the code thoroughly.

Corporate and partnership tax preparation require highly developed skills in research and analysis.

Note: The assessments in this course are presented in a sequence and must be completed in order. Do not complete Assessment 7 until you have received faculty feedback for Assessment 6.

Preparation

Corporate and partnership tax preparation require highly developed skills in research and analysis. Consider the following problems and research the applicable tax regulations to answer the questions.

Instructions

For this assessment, complete the following:

• Download Assessment 7 Problems [DOCX].
• Using the primary source of IRS.gov and the IRS Interactive Tax Assistant and Tax Trails, locate and interpret regulations and publications that relate to each problem.
• Record your answers to the problems in a Word document.
• Provide an explanation for each answer, including any related calculations and evidence.
• Include the following criteria from the scoring guide in your responses.
  • Determine partners’ recognized gains, explaining how much they gained and the rationale.
  • Prepare self-employment income and basis at the end of the year.
  • Determine how much gain or loss must be recognized on a distribution, ending partnership basis, and basis in equipment.
  • Calculate the gain or loss on the sale of a partnership interest.
  • Determine the basis of the stock in the hands of the shareholder.
  • Determine taxable income on a C corporation and the book income.
  • Determine the amount of taxable dividend, nontaxable distribution, and capital gain.
• Submit the Word document containing your answers to the problem and the explanations for your answers.

Competencies Measured

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

• Competency 3: Assess types of non-individual entities subject to federal taxation.
  • Determine partners’ recognized gains, explaining how much they gained and the rationale.
  • Prepare self-employment income and basis at the end of the year.
  • Determine how much gain or loss must be recognized on a distribution, ending partnership basis, and basis in equipment.
  • Calculate the gain or loss on the sale of a partnership interest.
  • Determine the basis of the stock in the hands of the shareholder.
  • Determine taxable income on a C corporation and the book income.
  • Determine the amount of taxable dividend, nontaxable distribution, and capital gain.