Which Item Below Is Usually Not a Characteristic of a Limited

question 118

Multiple Choice

Which item below is usually not a characteristic of a limited partnership?

• A)They have limited investment appeal.
• B)Loss-limitation rules of the tax code do not apply to them.
• C)Partnership interests may be difficult to sell.
• D)They have poor liquidity.

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Definitions:

Installment Method

The installment method is a tax provision that allows taxpayers to spread income recognition over the period they receive payments from the sale of certain property.

Gain Recognized

The profit realized from the sale of assets over its adjusted basis, which must be reported for tax purposes.

Like-kind Exchange Provisions

Tax regulations allowing the deferral of tax liability when business or investment properties are exchanged for similar properties.

Partnership Interest

An ownership share in a partnership that represents a partner's stake in the profits, losses, and assets of the partnership.