Identify Which of the Following Statements Is True

question 67

Multiple Choice

Identify which of the following statements is true.

• A) When a partnership assumes a liability on property contributed by a partner, the only effect on the contributing partner's basis in his or her partnership interest is that his or her basis will be increased by the amount of the liability assumed by the other partners.
• B) A contribution of services for a partnership interest is a tax- free transaction.
• C) For federal income tax purposes, formation of a partnership is governed by Sec. 721.
• D) All of the above are false.

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Definitions:

Investment

The undertaking of investing resources, usually capital, with the foresight of amassing income or profits.

Months

Units of time, typically used to measure periods within a year, consisting of 28 to 31 days.

Invested

Assigning monetary assets with the prospect of gaining returns or profit.

Investment Value

The worth of an asset or security based on its potential to generate income, appreciation, or other benefits to an investor.