Identify Which of the Following Statements Is True

question 101

Multiple Choice

Identify which of the following statements is true.

• A) The contribution of Sec. 1245 property to a partnership triggers recognition of ordinary income by the contributor at the time of the transfer.
• B) When a partnership interest is given to a partner in exchange for services, the partnership can deduct or capitalize the FMV of the services, depending on the nature of the services.
• C) A partner may not recognize ordinary income when receiving a capital and profits interest in a partnership in exchange for services.
• D) All of the above are false.

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Definitions:

Code of Business Conduct

A set of guidelines and ethical standards designed to help employees and directors make appropriate decisions in their business operations.

Small Business

An independently owned and operated company that is limited in size and revenue, depending on the industry.

Ethical Choices

Decisions made based on principles of right and wrong, often reflecting personal or societal values.

Business People

Individuals engaged in commercial, industrial, or professional activities, often with the goal of generating profits.