Which of the Following Statements Correctly Reflects One of the Rules

question 181

Multiple Choice

Which of the following statements correctly reflects one of the rules regarding proportionate liquidating distributions?

• A) Relief of liabilities is treated as a distribution of cash but only to the extent that the cash distribution does not
• Exceed the partner's basis in the partnership interest.
• B) A partner's basis in distributed unrealized receivables is the lesser of the partnership's basis in the
• Receivables or their fair market value.
• C) The basis of unrealized receivables cannot be stepped up to their fair market value unless the partner has adequate unabsorbed basis.
• D) Assets are deemed distributed in the following order: cash, unrealized receivables and inventory and finally, capital assets.
• E) The partner can recognize gain, but not loss, on a proportionate liquidating distribution.

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Definitions:

Financial Measures

Quantitative metrics used to assess the financial performance or financial health of a business or project.

Return on Investment (ROI)

Return on Investment measures the gain or loss generated on an investment relative to the amount of money invested.

Appraisal Costs

Costs associated with measuring, evaluating, or auditing products or services to ensure they meet quality standards and regulatory compliance.

Internal Failure Costs

Costs that are incurred as a result of identifying defective products before they are shipped to customers.