Alyce Owns a 30% Interest in a Continuing Partnership

question 64

Multiple Choice

Alyce owns a 30% interest in a continuing partnership. The partnership distributes a $35,000 year-end cash payment to Alyce. In a proportionate nonliquidating distribution, the partnership also distributed property (basis of $20,000, fair market value of $30,000) to Alyce. Immediately before the distributions of cash and property, Alyce's basis in the partnership interest was $60,000. As a result of the distribution, Alyce recognizes:

• A)No gain or loss.
• B)Ordinary loss of $5,000.
• C)Capital loss of $5,000.
• D)Ordinary gain of $5,000.
• E)Capital gain of $5,000.

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Definitions:

Growth Rate

The rate at which a living organism or part of an organism increases in size.

Natural Resources

Materials or substances such as minerals, forests, water, and fertile land that occur in nature and can be used for economic gain or ecological functions.

Biotic Potential

The maximum reproductive capacity of an organism under optimum environmental conditions.

Environmental Resistance

The sum of environmental factors that tend to restrict the biotic potential of an organism or population, affecting its growth and survival.