The RST Partnership Makes a Proportionate Distribution of Its Assets

question 122

Multiple Choice

The RST Partnership makes a proportionate distribution of its assets to Ryan, in complete liquidation of his partnership interest. The distribution consists of $40,000 in cash and capital assets with a basis to the partnership of $30,000 and a fair market value of $48,000. None of the payment is for partnership goodwill. At the time of the distribution, Ryan's partnership basis is $45,000 and the partnership has no liabilities and no "hot assets." If the partnership makes an optional basis adjustment election on a timely filed return, it recognizes:

• A) Capital gain of $25,000 and increases the basis of its remaining assets by $12,500.
• B) Capital loss of $5,000 and decreases the basis of its remaining assets by $5,000.
• C) No gain or loss and increases the basis of its remaining assets by $25,000.
• D) No gain or loss and decreases the basis of its remaining assets by $58,000.
• E) None of the above.

Distinguish between typedef statements and other C language constructs.

Understand the differences between large, publicly held corporations and closely held corporations.

Recognize the rights and powers of shareholders, including voting rights and mechanisms like proxies and voting trusts.

Identify the roles and responsibilities of directors and officers in corporations, including attendance and duty of care.

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Definitions:

Transaction

An agreement or communication carried out between two or more parties that results in the exchange of goods, services, or money.

Credits

Credits refer to a bookkeeping entry that increases a liability or equity account, or reduces an asset or expense account, reflecting the opposite side of a debit.

Assets

Assets are resources owned or controlled by a business, expected to bring future economic benefits.

Liabilities

Financial obligations or debts owed by a company to outside parties, including loans, accounts payable, and mortgages.