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:

Delay Relays

Delay relays are electromechanical or solid-state devices designed to delay the activation of an electrical circuit for a specified period, used in various timing and control applications.

Operating States

The various conditions or modes in which a device or system can exist, such as on, off, standby, or fault.

Control Coil

An electromagnetic coil used in electrical engineering to control the operation of devices, typically in relays or contactors.

Relay Contact

A component in a relay that opens or closes the electrical circuit it controls, acting as the switching element triggered by the relay.