Identify Which of the Following Statements Is True

question 2

Multiple Choice

Identify which of the following statements is true.

• A)On December 31 of the current year, Max Curcio's adjusted basis for his interest in the Maduro & Motta Partnership is $36,000. Maduro & Motta distributes cash of $6,000 and a parcel of land held as an investment to Curcio in liquidation of his entire interest in the partnership. The land has an adjusted basis of $18,000 to the partnership and an FMV of $42,000. Curcio's basis in the land is $18,000.
• B)Jake has a basis in his partnership interest of $40,000 before receiving a liquidating distribution of $5,000 cash, inventory with a basis of $4,000 and an FMV of $5,000, and land with a basis of $3,000 and an FMV of $6,000. Jake will receive no further distributions. He can recognize a loss of $28,000 at the time the liquidating distribution is received.
• C)A partner's holding period for a partnership interest is never considered when determining the holding period for property distributed in a liquidating distribution.
• D)All of the above are false.

Recognize when an appeal to emotion (pity) is irrelevant to an argument.

Understand the importance of precise language to avoid verbal disputes.

Identify and understand the fallacy of amphiboly.

Assess the difference between correlation and causation.

---

Definitions:

Spreadsheet Method

A method of financial analysis or budgeting that uses a spreadsheet software to organize, calculate, and present data.

Noncash Accounts

Noncash accounts are financial accounts that track transactions not involving physical cash, such as depreciation, accruals, and allowances for doubtful accounts.

Purchase of Equipment

The acquisition of physical assets or machinery intended for use in production or operational processes.

Indirect Method

A way of preparing the cash flow statement where net income is adjusted for non-cash transactions, deferred amounts, and changes in working capital.