Which of the Following Statements Regarding Capital and Profit Interests

question 28

Multiple Choice

Which of the following statements regarding capital and profit interests received for services contributed to a partnership is false?

• A) The holding period of a capital or profits interest begins on the date the interest is received.
• B) Partners receiving capital interests must recognize the liquidation value of their capital interests as capital gain.
• C) Partners receiving only profits interests include their share of partnership debt in the tax basis of their partnership interest.
• D) Partners receiving only profits interests generally don't recognize income when the profits interest is received.

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Definitions:

Sociobiology

An interdisciplinary branch of science that studies the biological underpinnings of social behavior across species.

Empathy

The ability to understand and share the feelings of another person, fostering emotional connection and comprehension.

Altruism

The selfless concern for the well-being of others, often leading to actions that benefit someone other than oneself.

Co-operation

The process of working together towards a common goal, often emphasizing mutual benefit and collaboration.