The PW Partnership's Balance Sheet Includes the Following Assets Immediately

question 83

Multiple Choice

The PW Partnership's balance sheet includes the following assets immediately before it liquidates: In complete liquidation, PW distributes the cash to Pamela and the unrealized receivables to Wade (equal partners) . Pamela and Wade each have an outside basis in PW equal to $5,000. PW has no liabilities at the time of the liquidation. What is the amount and character of Pamela's recognized gain or loss?

• A) $0.
• B) $5,000 capital gain.
• C) $5,000 ordinary income.
• D) $2,500 capital gain and $2,500 ordinary income.

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Definitions:

Strategic Purposes

Objectives or goals that are designed to achieve the long-term vision of an organization through planned and purposeful actions.

Equity Securities

Financial instruments representing ownership interest in a corporation, such as stocks.

Debt Investments

Financial assets involving lending money to an entity (corporate or governmental) that borrows the funds for a defined period at a variable or fixed interest rate.