Identify Which of the Following Statements Is True

question 8

Multiple Choice

Identify which of the following statements is true.

• A)Distribution of partnership income in the form of cash to partners is generally tax-free to the partners and the partnership.
• B)When partners receive cash distributions from the partnership, they pay taxes on those distributions.
• C)If money distributions exceed the partner's basis in the partnership interest, the partner would have to recognize gain on the distribution from the partnership. Such gain is usually an ordinary gain.
• D)All of the above are true.

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Definitions:

Accounting Equation

The accounting equation is a foundational principle of accounting, stating that assets equal liabilities plus owner's equity, serving as the basis for double-entry bookkeeping.

Rent for Equipment

The cost incurred for borrowing equipment necessary for the operations of a business or project.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing the ownership equity of the shareholders.

Assets

Economic resources owned or controlled by a business or individual that are expected to provide future benefits.