Identify Which of the Following Statements Is False

question 51

Multiple Choice

Identify which of the following statements is false.

• A) When a partnership interest is sold, the buyer and seller can allocate the sale price among the Sec. 751 assets and non- Sec. 751 assets in any reasonable manner.
• B) On June 30 of the current year, James Roe sells his interest in the Roe & Doe Partnership for $30,000. Roe's adjusted basis in Roe & Doe at June 30 is $7,500 before apportionment of any partnership income for the current year. The Roe & Doe Partnership uses the calendar year as its tax year and has no liabilities on June 30. Roe's distributive share of partnership income up to June 30 is $22,500. Roe acquired his interest in the partnership five years ago. Roe will have a long- term capital gain on the sale of his interest of $22,500.
• C) Section 751 assets include all inventory and all unrealized receivables in a sale or exchange situation.
• D) Statements B and C are true.

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Definitions:

Dividend Growth Model

An approach to valuing a company's shares by calculating the present value of its expected dividends through discounting.

Cumulative Voting

A voting system that allows shareholders to allocate all of their votes to one candidate or distribute them among multiple candidates during an election.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often with dividends that are paid out before those of common shares.

Debt

Money that is owed or due to another individual or entity, often involving agreed repayment terms and interest.