Which of the Following Is a Correct Definition of a Concept

question 168

Multiple Choice

Which of the following is a correct definition of a concept related to partnership taxation?

• A) The aggregate concept treats partners and partnerships as separate units and gives the partnership its own
• Tax "personality."
• B) A partner's capital sharing ratio is defined as the percent of partnership assets (capital) that would be
• Allocated to the partner upon liquidation of the partnership.
• C) The partnership's outside basis is defined as the sum of each partner's capital account balance.
• D) A special allocation is defined as an amount that could differently affect the tax liabilities of two or more partners.
• E) None of these statements is correct.

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Definitions:

Negotiable

Capable of being transferred or assigned to another party in return for value received; often used in reference to financial instruments.

Restrictive Endorsement

An endorsement that limits the transferability of an instrument or controls the manner of payment under an instrument.

Transferability

The ease with which ownership rights of certain assets, securities, or financial instruments can be transferred from one party to another.

Holder in Due Course

A party that acquires a negotiable instrument in good faith and for value, thus obtaining certain rights free from previous defenses.