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:

Firewall

Software or a hardware device that protects one or more computers from being electronically attacked. It inspects data for security purposes and filters traffic based on network protocols and rules established by a network administrator. Firewalls operate at the application layer of the OSI model.

TPM

TPM stands for Trusted Platform Module, a secure crypto-processor designed to carry out cryptographic operations, providing hardware-based security-related functions.

Electronic Key Card

An alternative to a key for room or building access.

Tailgating

An unauthorized person following an authorized individual to gain entry into a restricted area, often used in the context of security breaches.