Tom and William Are Equal Partners in the TW Partnership

question 6

True/False

Tom and William are equal partners in the TW Partnership. Just before TW liquidated, Tom's capital account balance was $50,000 and William's capital account balance was $30,000. To meet the substantial economic effect requirements, any liquidating cash distribution must be allocated in proportion to those ending capital account balances.

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Definitions:

Alluvial Fan

A fan or cone-shaped deposit of sediment built up by streams, typically found where a fast-flowing river flattens, slows, and spreads typically at the mouth of a canyon.

Desert Wash

A sandy or gravel-rich channel in a desert or other arid region.

Alluvial Fan

A fan-shaped deposit formed where a fast-flowing stream flattens, slows, and spreads out sediment at the base of mountains.

Desert Varnish

A thin, dark coating found on the surfaces of rocks in arid environments, composed of clay minerals mixed with iron and manganese oxides.