Which of the Following Is False Concerning Special Basis Adjustments

question 89

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.

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Definitions:

Current Ratio

A liquidity ratio measuring a company's ability to pay short-term obligations, calculated as current assets divided by current liabilities.

Acid-Test Ratio

A financial metric used to determine a company's short-term liquidity, calculating its ability to pay off short-term obligations without selling inventory.

Accounts Receivable Turnover

A financial metric that measures how effectively a company collects its receivables, calculated as net credit sales divided by the average accounts receivable.

Working Capital

A measure of a company's liquidity, operational efficiency, and short-term financial health, calculated as current assets minus current liabilities.