In Which of the Following Independent Situations Would the Transaction

question 137

Multiple Choice

In which of the following independent situations would the transaction most likely be characterized as a disguised sale?

• A) Partner George contributes appreciated property to the GM Partnership, and three years later GM distributes $100,000 proportionately to the partners.
• B) Brianna contributes property with a basis of $20,000 and a fair market value of $50,000 to the BGB Partnership in exchange for a 20% interest therein. The partnership agrees to distribute $20,000 to Brianna in fifteen months, if partnership cash flows from operations exceed $100,000 at that time. The partnership does not expect to produce operating cash flows of over $100,000 for at least five years.
• C) Luis contributes appreciated property to the BLP Partnership. Thirty months later, he receives a distribution from the partnership of $15,000 cash. None of the other partners received a distribution. There was no agreement that BLP would make the distribution, and Luis would have made the contribution whether or not the partnership made the distribution.
• D) None of the above transactions will be treated as a disguised sale.
• E) a., b., and c. are all treated as disguised sales.

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Definitions:

Psychotherapy

A therapeutic treatment involving psychological methods, typically involving conversations with a psychologist, to address mental health challenges or disorders.

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A long-lasting, deeply felt love that perseveres through challenges and time.

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