A Partnership May Make an Optional Election to Adjust the Basis

question 64

Multiple Choice

A partnership may make an optional election to adjust the basis of its property under § 754. If such an election is in effect, the partnership:

• A) Generally applies the election to transfers that take place at any later date unless the election is revoked.
• B) Only adjusts the basis of its property for differences in basis between that of the partnership and a distributee partner if a transferor-transferee situation arises within two years after the distribution.
• C) Increases the basis of similar retained assets when a distributee partner takes a basis that is greater than the partnership's basis in these assets, assuming the partnership does not have any receivables or inventory.
• D) Decreases the basis of similar retained assets when the distributee partner recognizes gain on the distribution.
• E) Decreases the basis of hot assets when a distributee partner recognizes a loss on a current nonliquidating) distribution.

---

Definitions:

Y-intercepts

The points where a graph intersects the y-axis of a coordinate plane.

X-intercepts

X-intercepts are the points where a graph crosses the x-axis, signifying where the function has a value of zero.

Y-intercepts

The points where a line crosses the y-axis of a coordinate system.

Graph

A visual representation of data or mathematical functions, typically displayed with axes to show relationships.