Identify Which of the Following Statements Is True

question 57

Multiple Choice

Identify which of the following statements is true.

• A)A contribution of services for a partnership interest is a tax-free transaction.
• B)For federal income tax purposes, formation of a partnership is governed by Sec. 721.
• C)When a partnership assumes a liability on property contributed by a partner, the only effect on the contributing partner's basis in his or her partnership interest is that his or her basis will be increased by the amount of the liability assumed by the other partners.
• D)All of the above are false.

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Definitions:

Clearance-Sensing Adjustment

A method or mechanism used to automatically adjust the clearances between components, ensuring optimal performance and preventing wear.

Automatic Slack Adjusters

Devices in air brake systems that automatically maintain the correct distance between the brake drum and brake lining to ensure effective braking.

Highway Tractors

Trucks designed primarily for the transportation of goods over long distances, characterized by a powerful engine and a cab for the driver.

Compressor

Any of a number of mechanically driven devices used to compress a gas. In trucks, compressors are used in air brake systems and A/C systems.