Which of the Following Statements Is Correct Regarding the Manner

question 54

Multiple Choice

Which of the following statements is correct regarding the manner in which partnership liabilities are reflected in the partners' bases in their partnership interests?

• A)Nonrecourse debt is allocated to the partners according to their loss-sharing ratios.
• B)Recourse debt is allocated to the partners to the extent of the partnership's minimum gain in the property.
• C)An increase in partnership debts results in a decrease in the partners' bases in the partnership interest.
• D)A decrease in partnership debt is treated as a distribution from the partnership to the partner and reduces the partner's basis in the partnership interest.
• E)Partnership debt is not reflected in the partners' bases in their partnership interests.

---

Definitions:

Profit

The financial gain obtained when the revenue generated from business activities exceeds the expenses, costs, and taxes involved in sustaining the activity.

Payment

The act of transferring money or its equivalent in return for goods, services, or fulfilling an obligation.

Land Resources

Natural resources encompassing geographical territories and the natural materials available within them, such as water, minerals, and fertile land used for agriculture.

Money

Anything that is generally accepted in exchange for goods and services.