The Partnership's Assumption of a Liability from a Partner Is

question 19

True/False

The partnership's assumption of a liability from a partner is treated as a cash distribution to the partner whose liability is assumed,which decreases his basis in the partnership.

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Definitions:

EBIT

Earnings Before Interest and Taxes, an indicator of a company's profitability excluding interest and income tax expenses.

Interest Expense

The cost incurred by an entity for borrowed funds, typically paid to lenders as interest on loans.

Breakeven Analysis

A calculation to determine the point at which revenue received equals the costs associated with receiving the revenue, indicating no net loss or gain.

Financial Leverage

The employment of loaned funds to boost the prospective earnings of an investment.