If Partnership Debt Is Reduced and a Partner Is Deemed

question 7

Multiple Choice

If partnership debt is reduced and a partner is deemed to receive a cash distribution, what impact does the deemed distribution have on the partner if it is in excess of her tax basis?

• A)The partner will treat the distribution in excess of her basis as ordinary income.
• B)The partner will treat the distribution in excess of her basis as capital gain.
• C)The partner will not ever be taxed on the distribution in excess of her basis.
• D)The partner will not be taxed on the distribution in excess of her basis until she sells her partnership interest.

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Definitions:

Head Node

The first node in a linked list or tree data structure.

Object

In programming, an object is an instance of a class that contains both data, in the form of fields, and methods, which are functions specific to the class.

NullPointerException

An exception thrown in Java when an application attempts to use an object reference that has the null value, indicating that no object has been assigned to the reference.

Preorder Traversal

A way of traversing a tree data structure where each node is visited before its child nodes in a top-down, left-right manner.