Identify Which of the Following Statements Is True

question 33

Multiple Choice

Identify which of the following statements is true.

• A)If a partnership asset with a deferred precontribution gain is distributed in a nonliquidating distribution to the partner who contributed the asset, the precontribution gain must be recognized by the partner.
• B)The partner's basis in the partnership interest is normally reduced by the FMV of property distributed in a nonliquidating distribution.
• C)When a current distribution from a partnership reduces the basis of the partnership interest to zero, the partner's interest in the partnership is terminated.
• D)All of the above are false.

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Definitions:

Principal/Employer

The party in an agency relationship who authorizes another (the agent) to act on their behalf, or the entity that hires employees to perform work.

Liability

[Rephrased again] indicates a party's legal obligation to remedy a loss or damage caused to another, potentially involving restitution or reparations.

Employee

An individual hired by a company or another person to perform work in exchange for compensation.

Tort

A civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act.