Which of the Following Statements Regarding Capital and Profits Interests

question 130

Multiple Choice

Which of the following statements regarding capital and profits interests received for services contributed to a partnership is false?

• A)The holding period of a capital or profits interest begins on the date the interest is received.
• B)Partners receiving capital interests must recognize the liquidation value of their capital interests as capital gain.
• C)Partners receiving only profits interests generally don't recognize income when the profits interest is received.
• D)Partners receiving only profits interests include their share of partnership debt in the tax basis of their partnership interest.

---

Definitions:

Tax Policy

Refers to the government's approach to taxation, including the determination of tax rates, exemptions, and regulations affecting the tax liability of individuals and businesses.

Antitrust Laws

Regulations that prevent monopolies and promote competition among businesses.

Economic Matters

Issues and situations that involve the production, distribution, and consumption of goods and services.

Money Supply

The total financial capital in an economy at a given point in time, including the accumulation of cash, coins, and balances in checking and savings accounts.