Loss Cannot Be Recognized on a Current (Nonliquidating) Distribution from a Partnership

question 192

True/False

Loss cannot be recognized on a current (nonliquidating) distribution from a partnership unless cash, unrealized receivables, and/or § 1231 assets are the only items distributed.

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Definitions:

Indirect Method

A method of computing the net cash provided by operating activities that starts with net income and adjusts it to a cash basis.

Operating Activities

These are the day-to-day actions that are involved in running a business which affect the cash flow but are not investing or financing activities.

Investing Activities

These activities generate cash inflows and outflows related to acquiring or disposing of noncurrent assets such as property, plant, and equipment, long-term investments, and loans to another entity.

Cash Outflow

Money or financial resources leaving a business, typically for expenses, investments, or other payments.