Which of the Following Statements Regarding Capital and Profit Interests

question 36

Multiple Choice

Which of the following statements regarding capital and profit interests received for services contributed to a partnership is false?

• A)The holding period of a capital or profits interest begins on the date the interest is received.
• B)Partners receiving capital interests must recognize the liquidation value of their capital interests as capital gain.
• C)Partners receiving only profits interests generally don't recognize income when the profits interest is received.
• D)Partners receiving only profits interests include their share of partnership debt in the tax basis of their partnership interest.

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Definitions:

Systematic Desensitization

A type of exposure therapy that associates a pleasant relaxed state with gradually increasing anxiety-triggering stimuli. Commonly used to treat phobias.

Counterconditioning

A behavior therapy technique that involves replacing an unwanted or negative response to a stimulus with a positive one.

Psychological Disorders

Psychological disorders are patterns of behavioral or psychological symptoms that impact multiple areas of life and/or create distress for the individual suffering from them.

Psychotherapy

A form of therapy that involves talking with a mental health professional to address emotional issues and mental disorders.