Identify Which of the Following Statements Is False

question 89

Multiple Choice

Identify which of the following statements is false.

• A)On June 30 of the current year, James Roe sells his interest in the Roe & Doe Partnership for $30,000. Roe's adjusted basis in Roe & Doe at June 30 is $7,500 before apportionment of any partnership income for the current year. The Roe & Doe Partnership uses the calendar year as its tax year and has no liabilities on June 30. Roe's distributive share of partnership income up to June 30 is $22,500. Roe acquired his interest in the partnership five years ago. Roe will have a long-term capital gain on the sale of his interest of $22,500.
• B)Section 751 assets include all inventory and all unrealized receivables in a sale or exchange situation.
• C)When a partnership interest is sold, the buyer and seller can allocate the sale price among the Sec. 751 assets and non-Sec. 751 assets in any reasonable manner.
• D)Statements B and C are true.

---

Definitions:

Market Returns

The total return, including capital gains and dividends, from investing in financial markets over a specified period.

Historical Performance

Refers to the past financial results and operations of a company or investment, used to predict future performance.

Efficient-Market Hypothesis

The theory that all existing information is already reflected in stock prices, thus making it impossible to consistently achieve higher returns than the overall market through stock selection or market timing.

Stock Prices

The cost or value of a share of a company's stock traded on the stock market.