The PW Partnership's Balance Sheet Includes the Following Assets Immediately

question 72

Multiple Choice

The PW partnership's balance sheet includes the following assets immediately before it liquidates: $\begin{array}{lrr}\text { Basis } & \text { FMV } \\\text {Cash}&\$ 10,000 & \$ 10,000 \\\text {Unrealized receivables}&\underline { -0- }& \underline { 10,000 }\\\text {Total}&\underline { \$ 10,000}&\underline { \$ 20,000}\end{array}$ In complete liquidation,PW distributes the cash to Pamela and the unrealized receivables to Wade (equal partners) .Pamela and Wade each have an outside basis in PW equal to $5,000.PW has no liabilities at the time of the liquidation.What is the amount and character of Pamela's recognized gain or loss?

• A)$0.
• B)$5,000 capital gain.
• C)$5,000 ordinary income.
• D)$2,500 capital gain and $2,500 ordinary income.

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Definitions:

Flooding

A behavioral therapy technique used to treat phobias and anxiety disorders by exposing the patient to their fear object or context without any danger, in order to overcome their anxiety.

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired; a response that is initially elicited by the second stimulus is eventually elicited by the first stimulus alone.

Research

The systematic investigation and study of materials and sources in order to establish facts and reach new conclusions.

Avoidance Responses

Behaviors aimed at preventing exposure to feared stimuli, which can reinforce anxiety and phobic disorders.