The XYZ Partnership Owns the Following Assets on December 31

question 36

Multiple Choice

The XYZ Partnership owns the following assets on December 31: $$\begin{array} { | l | r | r | } \hline & { \text { Basis } } &{ \text { FMV } } \\\hline \text { Cash } & \$ 20,000 & \$ 20,000 \\\hline \text { Unrealized receivables } & 0 & 15,000 \\\hline \text { Inventory } & \$ 30,000 & 35,000 \\\hline \text { Land (Sec. } 1231 \text { asset) } & 40,000 & 70,000 \\\hline\end{array}$$ By how much must XYZ reduce its unrealized receivables to avoid meeting the substantially appreciated inventory test?

• A)$10,000
• B)$14,000
• C)$15,000
• D)No amount of reduction of unrealized receivables will affect meeting the substantially appreciated inventory test.

---

Definitions:

Over-The-Counter

Refers to medications or products that can be purchased without a prescription.

Body Language

Nonverbal communication through physical behaviors such as posture, gestures, and facial expressions, conveying feelings and intentions.

Screening

The process of conducting tests or evaluations on a person or group to detect an undiagnosed disease or condition at an early stage.

Triage

The process of determining the priority of patients' treatments based on the severity of their condition, used in emergencies and disasters to maximize the number of survivors.