Identify Which of the Following Statements Is True

question 50

Multiple Choice

Identify which of the following statements is true.

• A)A liquidating distribution that terminates a partnership interest cannot include more than one distribution.
• B)A partnership with a large amount of unrealized receivables and substantially appreciated inventory items liquidated and distributed all of its assets in kind to each partner in proportion to their partnership interests. Each partner will report ordinary income at the time these assets are received equal to their FMV.
• C)The rule for recognizing gain on a liquidating distribution is the same rule that is used for a current distribution.
• D)All of the above are false.

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Definitions:

Social Security System

A government program that provides financial assistance to retirees, disabled workers, and survivors of deceased workers.

Tax Bracket

A range of incomes taxed at a given rate.

Average Tax Rate

The ratio of the total amount of taxes paid to the total taxable income, showing the share of income that goes to taxes.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating the percentage of an additional dollar of earnings that will be paid in tax.