Identify Which of the Following Statements Is True

question 88

Multiple Choice

Identify which of the following statements is true.

• A) Any distributive share of a loss that cannot be deducted by a partner because of the Sec. 704(d) basis loss limitation is permanently lost.
• B) Martin and Carlos formed an equal partnership to which Martin contributed $10,000 cash and Carlos contributed a building worth $10,000 with a basis of $2,000. In the first year of operation, the partnership suffered a $10,000 ordinary loss. Martin and Carlos can each deduct a $5,000 loss on their personal tax returns.
• C) When adjusting a partner's basis in a partnership interest, the negative basis adjustments are made prior to the positive basis adjustments.
• D) All of the above are false.

---

Definitions:

Underpriced IPOs

Initial Public Offerings priced below their market value, often leading to significant investor interest and potential profit.

Oversubscribed IPOs

Initial Public Offerings for which the demand for shares exceeds the number of shares available.

Desired Allotment

The quantity of shares an investor hopes to receive during a public offering or other allocation process.

Ex-Rights Date

The first day a stock trades without the right to receive a specific dividend or distribution announced by the company.