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:

Compromise of 1850

A package of five bills passed in the United States in 1850 aimed at defusing political confrontations between slave and free states regarding territories acquired in the Mexican-American War.

Popular Sovereignty

The principle that the authority of a state and its government is created and sustained by the consent of its people, through their elected representatives.

Fugitive Slave Law

Legislation passed in the United States that required the capture and return of runaway slaves.

Sectional Controversy

Disputes and divisions in the United States, particularly between the North and South, over issues like slavery, tariffs, and states' rights, which ultimately led to the Civil War.