As a General Rule,a Distribution to a Partner from a Partnership

question 38

Multiple Choice

As a general rule,a distribution to a partner from a partnership is treated as:

• A)A guaranteed payment.
• B)A reduction in basis,and no gain or loss is recognized.
• C)Ordinary income.
• D)A capital gain distribution.

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Definitions:

Capital Expenditure

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment to improve long-term business operations.

Gain or Loss

The financial result from a transaction where the sale price is either higher (gain) or lower (loss) than the purchase price or the book value of an asset.

Disposed Asset

An asset that has been sold, discarded, or otherwise disposed of by a company.

Book Value

Book value is the net value of a company's assets found on its balance sheet, calculated by subtracting liabilities from the total assets.