Which of the Following Statements Is Correct

question 62

Multiple Choice

Which of the following statements is correct?

• A)A partnership may make an annual election to adjust the basis of its assets upon the sale of a partnership interest.
• B)The Sec. 754 election applies to both sales and distributions.
• C)The Sec. 754 election applies to only current and nonliquidating distributions.
• D)A partnership can revoke a Sec. 754 election every 5 years.

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Definitions:

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in an equal annual amount.

Depreciable Cost

The cost of a fixed asset minus its salvage value, which is the total amount that can be depreciated over its useful life.

Initial Cost

The amount of money spent to acquire or start up an asset or investment, excluding any subsequent costs for maintenance or operation.

Accumulated Depreciation

The total depreciation for a fixed asset that has been charged to expense since the asset was acquired and made available for use.