Appendix C: 2013 Released AICPA Questions for Regulation

1. To which of the following transactions does the common law Statute of Frauds not apply?

a. Contracts for the sale of real estate.

b. Agreements made in consideration of marriage.

c. Promises to pay the debt of another.

d. Contracts that can be performed within one year.

1. (d) The question requires that you identify the type of contract that does not require a writing under the Statute of Frauds. Contracts that cannot be performed within one year need a writing, not contract that can be performed within one year. Answers (a), (b), and (c) are incorrect because each of those answers describe contracts that need a writing under the Statute of Frauds.

2. Gulde’s tax basis in Chyme Partnership was $26,000 at the time Gulde received a liquidating distribution of $12,000 cash and land with an adjusted basis to Chyme of $10,000 and a fair market value of $30,000. Chyme did not have unrealized receivables, appreciated inventory, or properties that had been contributed by its partners. What was the amount of Gulde’s basis in the land?

a. $0

b. $10,000

c. $14,000

d. $30,000

2. (c) The requirement is to determine Guide’s basis for the land that was received in a liquidating distribution from a partnership. Generally, no gain or loss is recognized on a liquidating distribution made to a partner. If both cash and land are received in the liquidating distribution, the basis for the partner’s partnership interest is first reduced by ...

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