All of the Following Statements Are True Regarding Nonliquidating Distributions

question 1518

Multiple Choice

All of the following statements are true regarding nonliquidating distributions of a partnership except

• A) in no circumstances may the partner's basis in the partnership interest be reduced below zero as a result of a nonliquidating distribution.
• B) in no circumstances will the partner or the partnership recognize gain or loss from a nonliquidating distribution.
• C) if, after money distributions reduce the partnership basis, the adjusted basis of distributed property does not exceed the partner's basis in the partnership interest, the basis of the distributed property carries over to the partner.
• D) if money is distributed in excess of the partnership interest, the partner receiving the distribution has capital gain.

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Definitions:

Short-term Consequences

Immediate, often temporary effects that follow an action or decision.

Long-term Consequences

The far-reaching effects or outcomes of an action, condition, or disorder that manifest over an extended period.

Harm Reduction

Strategies and approaches aimed at minimizing the negative health, social, and legal impacts associated with behavior, such as drug use, that cannot be completely stopped.

Problematic Substance Use

The use of alcohol, drugs, or other substances in a way that is harmful to the user or to others, often leading to addiction or substance use disorders.