When Does a Partner Recognize Gain on a Distribution

question 72

Multiple Choice

When does a partner recognize gain on a distribution?

• A)In a liquidating distribution when the fair market value of the property received exceeds partnership interest basis.
• B)In a nonliquidating distribution and the property received exceeds the fair market value of the partnership interest.
• C)In a nonliquidating distribution and the cash received exceeds the basis of the partnership interest.
• D)Gain is not recognized until the property received for the partnership interest is sold.

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Definitions:

Price

The amount of money expected, required, or given in payment for something.

Delivery

The process of transporting goods from one place to another or the act of transferring the possession of a legal instrument.

Valid Offer

A legally binding proposal made by one party to another to form a contract, requiring clear terms, intention, and communication.

Knowledge

The understanding, awareness, or familiarity gained through education or experience.