Identify Which of the Following Statements Is True

question 68

Multiple Choice

Identify which of the following statements is true.

• A)If a partner sells property received in a partnership distribution for a gain and the property was inventory in the hands of the distributing partnership, the partner will always recognize ordinary income.
• B)The primary purpose of Sec. 751 is to prevent partnerships from converting capital gains into ordinary income.
• C)Unrealized receivables include rights to payments on the sale of a capital asset.
• D)All of the above are false.

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Definitions:

Projected Addition

An estimate or forecast of the future increase in a specific metric such as revenue, profits, or assets.

External Financing

Funding obtained from outside of a company, rather than from its own earnings, to support its operations or growth. This can come from debt, equity, or other financial instruments.

Constant Ratio

A fixed ratio that remains unchanged over time or under various conditions.