Which of the Following Statements Is True Regarding Partnership Operating

question 66

Multiple Choice

Which of the following statements is true regarding partnership operating distributions?

• A) If a partner's outside basis is greater than the bases of the assets distributed in an operating distribution, the partner will recognize a loss.
• B) If a partner's outside basis is less than the bases of the assets distributed in an operating distribution, the partner will recognize a loss.
• C) If a partner's outside basis is greater than the bases of the assets distributed in an operating distribution, the partner will recognize a gain.
• D)None of these statements is true.

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Definitions:

Marginal Tax Rate

The tax rate applied to the next dollar of income, indicating how much tax will be paid on an additional dollar of earnings.

Proportional

Pertaining to a relationship or situation where two quantities vary directly with each other.

Taxable Income

The amount of income that is subject to taxation, after all allowable deductions, credits, and exemptions.

Total Income

The sum of all earnings received by an individual or entity, encompassing wages, salaries, profits, rents, and other forms of earnings.