The XYZ Partnership Owns the Following Assets on December 31

question 2

Multiple Choice

The XYZ Partnership owns the following assets on December 31: A partner has a 20% interest with a basis of $6,000 in XYZ before receiving a liquidating distribution of $10,000 cash.XYZ Partnership has no liabilities.His recognized gain is

• A) $4,000 capital gain.
• B) $3,000 capital gain and $1,000 ordinary income.
• C) $3,000 ordinary income.
• D) $3,000 ordinary income and $1,000 capital gain.

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Definitions:

Diversified Portfolios

Diversified portfolios comprise a mix of investments across various asset classes, aiming to reduce risk by not overly concentrating assets in one area.

Investment Performance

An assessment of how an investment has done over a specific period, often compared to a benchmark or standard.

Financial Intermediaries

Institutions that act as middlemen between savers and borrowers, facilitating the flow of funds in the financial system.

Diversify Their Portfolios

The strategy of spreading investments among various financial instruments, industries, and other categories to minimize risk.