Aaron Owns a 30% Interest in a Continuing Partnership

question 37

Multiple Choice

Aaron owns a 30% interest in a continuing partnership.The partnership distributes a $35,000 year-end cash payment to all the partners.In a proportionate nonliquidating distribution, the partnership also distributed property (basis of $15,000, fair market value of $20,000) to Aaron.Immediately before the distribution, Aaron's basis in the partnership interest was $50,000.As a result of the distribution, Aaron recognizes:

• A)No gain or loss.
• B)Ordinary loss of $5,000.
• C)Capital loss of $5,000.
• D)Ordinary gain of $5,000.
• E)Capital gain of $5,000.

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Definitions:

Define

To clearly state the meaning of a word or phrase, often to clarify its significance in a specific context.

Impression Management

The process by which individuals attempt to control the perceptions others have of them, often in social or professional contexts.

Ingratiation

A psychological tactic involving the use of flattery or other forms of manipulation to make oneself more likable or acceptable to another.

Unimportant Assignments

These are tasks or projects deemed to have little value or priority in the context of broader goals or objectives.