Identify Which of the Following Statements Is True

question 68

Multiple Choice

Identify which of the following statements is true.

• A) Gain recognized by a contributing partner because of the assumption of liabilities by the partnership increases the partnership's basis in the contributed property.
• B) A partner's relief of debt is treated as if the partner receives a cash distribution.
• C) When a partnership assumes any liabilities of the transferor, the transferor has an increase in the basis of his or her partnership interest.
• D) All of the above are false.

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Definitions:

Risk Management

The process of identifying, assessing, and prioritizing risks followed by coordinated efforts to minimize, monitor, and control the probability or impact of unfortunate events.

Income Beneficiary

An individual or entity entitled to receive income generated from a trust, estate, or account, rather than the principal sum itself.

Trust

A fiduciary arrangement where a trustee holds assets on behalf of beneficiaries, often used for estate planning and asset protection.

Dividend Income

Income earned from owning shares of a company, typically paid out from the company's profits to shareholders at regular intervals.