Which of the Following Statements Regarding Disproportionate Distributions Is False

question 89

Multiple Choice

Which of the following statements regarding disproportionate distributions is false?

• A)A disproportionate distribution occurs when a partner receives more than his proportionate share of the partnership's hot assets.
• B)A disproportionate distribution occurs when a partner receives less than his proportionate share of the partnership's hot assets.
• C)The tax provisions related to disproportionate distributions attempt to preserve the partners' share of ordinary income potential.
• D)Disproportionate distributions will only occur in liquidating distributions.

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Definitions:

Joint Costs

Costs incurred in the process of producing two or more products simultaneously up to a split-off point, where they become distinguishable.

Market Value at Split-Off Method

A method used in accounting to allocate joint costs to products based on their market values at the point where the products are separable or "split off" from the joint process.

Joint Costs

Costs incurred in the process of producing two or more joint products before the point at which the products become separately identifiable.

Joint Costs Method

An accounting approach used to allocate costs among multiple products that are produced simultaneously from the same process or materials.