The XYZ Partnership Owns the Following Assets on December 31

question 83

Multiple Choice

The XYZ Partnership owns the following assets on December 31: A partner has a 20% interest with a basis of $6,000 in XYZ before receiving a liquidating distribution of $10,000 cash. XYZ Partnership has no liabilities. His recognized gain is

• A)$4,000 capital gain.
• B)$3,000 capital gain and $1,000 ordinary income.
• C)$3,000 ordinary income.
• D)$3,000 ordinary income and $1,000 capital gain.

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Definitions:

Model

A representation, either physical, mathematical, or conceptual, used to describe, explain, or predict phenomena in the real world.

Exposed

Being subject to something or made vulnerable to its effects.

Groupthink

A phenomenon where the desire for harmony or conformity in a group leads to irrational or dysfunctional decision-making outcomes.

Illusion of Invulnerability

A cognitive bias in which a person or group overestimates their immunity from harm or negative outcomes, often leading to risk-taking behaviors.