Kristen and Harrison Are Equal Partners in the KH Partnership

question 53

Multiple Choice

Kristen and Harrison are equal partners in the KH Partnership. The partners formed the partnership five years ago by contributing cash. Prior to any distributions Harrison has a basis in his partnership interest of $43,500. On December 31, KH makes a proportionate operating distribution of $46,500 cash to Harrison. What is the amount and character of Harrison's recognized gain or loss and what is his remaining basis in KH?

• A)$0 gain, $0 basis.
• B)$3,000 capital gain, $0 basis.
• C)$3,000 capital loss, $0 basis.
• D)$3,000 capital gain, $43,500 basis.

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Definitions:

Tracheobronchial Tree

The network of air passages within the lungs, including the trachea, bronchi, and bronchioles, that allows air movement for respiration.

Epiglottis

A leaf-shaped flap of cartilage located behind the tongue at the top of the larynx; its function is to seal off the windpipe during eating, to prevent food from entering the airway.

Larynx

A structure in the throat containing the vocal cords; it is involved in breathing, producing sound, and protecting the trachea against food aspiration.

Alveoli

are the tiny air sacs in the lungs where the exchange of oxygen and carbon dioxide takes place.