George Is Planning to Retire from the GDP LLC, Where

question 44

Multiple Choice

George is planning to retire from the GDP LLC, where he is an active managing member owning a 60% interest. Capital is not a material income-producing factor to GDP. The LLC can either redeem his interest under § 736 or he can sell his interest to Dale, who currently owns a 20% interest. The LLC's operating agreement is silent regarding treatment of goodwill. As to George's alternatives, which one of the following statements is true?

• A)Either the sale or the redemption would terminate the partnership.
• B)Payments to George for his share of GDP's goodwill would be treated the same for either a sale or redemption.
• C)George will report ordinary income related to his share of "hot assets" under either the sale or the redemption scenario.
• D)If GDP/Dale negotiate payments over several years, either an installment sale or a redemption over time would result in the same tax situation to George.
• E)All of the above statements are true.

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Definitions:

Axes

Plural form of axis; referring to the imaginary lines around which objects rotate or the lines used to reference points or directions in geometry or graphs.

Behavior Therapists

Healthcare professionals who specialize in treating mental health disorders by focusing on modifying negative behaviors through various therapeutic techniques such as conditioning.

Human Behavior

The range of actions and mannerisms exhibited by humans in conjunction with their environment, social structures, and culture.

Psychological Disorders

Mental disorders characterized by persistent disturbances in behavior, thought, or emotions, significantly impairing an individual's ability to function.