Which of the Following Is Not a Characteristic of a Partnership

question 83

Multiple Choice

Which of the following is not a characteristic of a partnership?

• A)Must be formed under state law
• B)Formation is generally tax free except for services received for a partnership interest
• C)Distributions of entity income are tax-free
• D)Loss is never recognized on a nonliquidating distribution

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Definitions:

Share

A unit of ownership in a company or financial asset that gives the holder a claim on part of the company's assets and earnings.

Transfer Agent

An entity appointed by a corporation to maintain records of investors, account balances, and transactions; to issue and cancel shares; and to handle share transfers.

Financial Institution

An establishment that conducts financial transactions such as investments, loans, and deposits.

Stockholders

Individuals or entities that own shares in a corporation, thus having an ownership stake in the business.