Identify Which of the Following Statements Is True

question 31

Multiple Choice

Identify which of the following statements is true.

• A)Bob gives his 16-year-old daughter Michelle a 20% capital and profits interest in his accounting practice. She does no work for the partnership and is not involved at all with the operations of the partnership. In fact, she does not know that her dad transferred the interest in the partnership to her. If the partnership allocates an $8,000 distributive share of ordinary income to her, it is properly reported on Michelle's individual tax return.
• B)Valid family partnership partners may be subject to the "kiddie tax."
• C)Joan gives her daughter, Sarah, a 25% interest in a partnership that operates a steel mill. Sarah, age 19, was allocated $20,000 from the partnership as her share of the partnership ordinary income. The IRS will require the income to be included on Sarah's return.
• D)All of the above are false.

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Definitions:

Deindividuation

A psychological state characterized by diminished self-consciousness, reduced self-awareness, and weakened social norms, often leading to impulsive and deviant behavior.

Anonymity

The state of being anonymous, where an individual's identity is unknown or concealed.

Groups

Collections of individuals who interact with one another, share similar characteristics, and collectively have a sense of unity or identity.

Investment Model

A theory in social psychology that examines how commitment in relationships is affected by satisfaction, quality of alternatives, and investments made into the relationship.