Derrick's Interest in the DEF Partnership Is Liquidated When His

question 61

Multiple Choice

Derrick's interest in the DEF Partnership is liquidated when his basis in the interest is $30,000. He receives a liquidating distribution of $20,000 cash and inventory with a basis of $8,000 and an FMV of $30,000. Derrick will recognize

• A)no gain or loss.
• B)$2,000 capital loss.
• C)$2,000 ordinary loss.
• D)$10,000 capital loss and $20,000 ordinary loss.

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Definitions:

Misappropriate

The act of improperly or illegally taking, using, or diverting something, especially money or property, that does not rightfully belong to the individual or entity.

Counterfeit Mark

An unauthorized replication of a trademarked logo or brand intended to deceive or defraud by passing off as genuine.

Criminal Offense

An act punishable by law, typically involving a breach of a statute that prohibits it.

Infringement

The violation or breach of a law, agreement, or right.