Which of the Following Is False Concerning Special Basis Adjustments

question 31

Multiple Choice

Which of the following is false concerning special basis adjustments under Section 754?

• A)Special basis adjustments are intended to eliminate discrepancies between inside and outside bases.
• B)Special basis adjustments are an annual election made by the partnership.
• C)Special basis adjustments can occur when a new investor purchases a partnership interest.
• D)Special basis adjustments can occur when a partner recognizes a gain or loss from a distribution.

---

Definitions:

Liquidated Damages

A set sum of money required as a penalty for not fulfilling contractual obligations.

Injunction

A legal order issued by a court that directs an individual or entity to do or to refrain from doing a specific act, used to prevent harm or to preserve the status quo pending a final determination of the case.

Specific Performance

A legal remedy requiring a party to execute a contract as agreed, rather than paying damages for non-performance.

Specific Performance

A legal remedy that compels a party to execute a contract according to the precise terms agreed upon, rather than awarding damages for breach.