Which of the Following Statements Regarding Liquidating Distributions Is True

question 59

Multiple Choice

Which of the following statements regarding liquidating distributions is true?

• A)A partner will recognize a gain when the partnership distributes only money and the amount is greater than the partner's outside basis.
• B)A partner will recognize a gain when the partnership distributes only money and hot assets and the inside bases of the distributed assets are greater than the partner's outside basis.
• C)A partner will recognize a gain when the partnership distributes money, hot assets, and other property and the inside bases of the distributed assets are greater than the partner's outside basis.
• D)A partner will recognize a gain when the partnership distributes only money and the amount is less than the partner's outside basis.

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Definitions:

Financial Crisis

A significant disruption in the flow of funds in financial markets, characterized by sharp declines in asset prices and firm failures.

Support Level

A price level at which an asset tends to stop falling because demand is strong enough to prevent the price from declining further.

Market

A place or platform where buyers and sellers come together to exchange goods, services, or financial instruments.

Short Interest

The total number of shares of a particular stock that have been sold short by investors but have not yet been covered or closed out.