In a Proportionate Current (Nonliquidating) Distribution of Cash and a Capital

question 203

True/False

In a proportionate current (nonliquidating) distribution of cash and a capital asset, the partner recognizes gain to the extent the amount of cash plus the fair market value of property distributed exceeds the partner's basis in the partnership interest.

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Definitions:

Cash Dividend

A payment made by a company out of its earnings to shareholders, usually in cash.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing shareholders' ownership.

Earnings

The amount by which revenues exceed expenses.

Outstanding Shares

The aggregate amount of a company's shares that have been distributed and are owned by investors.