Which of the Following Statements Regarding the Sec

question 130

Multiple Choice

Which of the following statements regarding the Sec.754 adjustment is incorrect?

• A)Sec.754 permits a basis adjustment to partnership assets upon the sale of a partnership interest.
• B)Sec.754 permits a basis adjustment to partnership assets upon certain distributions.
• C)The Sec.754 election is made annually by the partnership.
• D)The Sec.754 election is intended to prevent inequities that may occur when the bases of partnership assets are not adjusted.

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Definitions:

Distributive Property

A property that allows one to multiply a single term by each term within a parenthesis in a sum or difference.

Real Numbers

The set of all rational and irrational numbers, including all numbers that can be written as a decimal.

Associative Property

A mathematical principle stating that the way in which terms are grouped in an operation (addition or multiplication) does not change the result.

Addition

The mathematical operation that combines two or more quantities into a single sum.