Identify Which of the Following Statements Is True

question 67

Multiple Choice

Identify which of the following statements is true.

• A)A partner's relief of debt is treated as if the partner receives a cash distribution.
• B)When a partnership assumes any liabilities of the transferor, the transferor has an increase in the basis of his or her partnership interest.
• C)Gain recognized by a contributing partner because of the assumption of liabilities by the partnership increases the partnership's basis in the contributed property.
• D)All of the above are false.

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Definitions:

Rate of Interest

The percentage of an amount of money charged for its use per some period, often annually, reflecting the cost of borrowing money or the return on invested capital.

Initial Investment

Refers to the initial amount of money invested in a project, business venture, or asset, serving as the baseline for future return analysis.

Cash Inflows

The total amount of money being transferred into an entity, typically measured over a certain period and arising from operational, investment, and financing activities.

IRR

Internal Rate of Return, a financial metric used to estimate the profitability of potential investments by calculating the interest rate at which the net present value of all cash flows (both positive and negative) from a particular project equals zero.