Derrick's Interest in the DEF Partnership Is Liquidated When His

question 61

Multiple Choice

Derrick's interest in the DEF Partnership is liquidated when his basis in the interest is $30,000. He receives a liquidating distribution of $20,000 cash and inventory with a basis of $8,000 and an FMV of $30,000. Derrick will recognize

• A)no gain or loss.
• B)$2,000 capital loss.
• C)$2,000 ordinary loss.
• D)$10,000 capital loss and $20,000 ordinary loss.

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Definitions:

Hidden Emotions

Feelings that individuals keep concealed, either consciously or unconsciously, from others or even themselves.

Universally Recognized

Acknowledged or accepted across all cultures or societies without exception.

Primary Emotions

Basic emotions experienced by humans across cultures that are universally recognized, such as happiness, sadness, fear, and anger.

Inner-Directing Force

An internal motivation or drive that influences individuals to act or behave in certain ways, often related to personal values and goals.