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:

Enterprise Compact

An agreement or understanding between employers and employees within a company aiming to improve work conditions.

Representation

The act of acting or speaking on behalf of someone else or a group, particularly in decision-making processes or negotiation settings.

Incremental Changes

Small, gradual adjustments or improvements made in a system, process, or organization rather than large, drastic reforms.

Monetary Penalties

Financial fines or fees imposed as punishment for breaking laws or rules.