Which of the Following Statements Regarding the Sec

question 2109

Multiple Choice

Which of the following statements regarding the Sec. 754 adjustment is incorrect?

• A) The Sec. 754 election is made annually by the partnership.
• B) Sec. 754 permits a basis adjustment to partnership assets upon the sale of a partnership interest.
• C) Sec. 754 permits a basis adjustment to partnership assets upon certain distributions.
• D) The Sec. 754 election is intended to prevent inequities that may occur when the bases of partnership assets are not adjusted.

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Definitions:

Price Ceiling

A legal maximum price set by the government for a particular good or service, aimed at preventing prices from reaching excessively high levels.

Shortage/Surplus

A shortage occurs when demand exceeds supply for a product or service, whereas a surplus occurs when supply exceeds demand, leading to downward pressure on prices.

Demand Equation

A mathematical expression that relates the quantity of a good that consumers are willing to buy to the good's price and other variables such as income and the price of related goods.

Price Floor

A government-imposed minimum price set above the equilibrium price, preventing market prices from falling below it.