Which of the Following Transactions Will Not Result in Termination

question 70

Multiple Choice

Which of the following transactions will not result in termination of a partnership for Federal tax purposes?

• A)The partnership is incorporated.
• B)A 70% interest in partnership capital and profits is sold to a third party purchaser.
• C)Cash is distributed in liquidation of a 60% partner's interest in a five-partner partnership.
• D)A 40% interest in partnership capital and profits is sold to the other partner in a two-partner partnership.
• E)None of the above.

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Definitions:

Timeliness

The importance of making or delivering something within an expected time frame for it to be relevant or useful.

Decision Making

is the process of selecting a course of action from multiple alternatives to achieve a specific objective.

Liabilities

Financial obligations or debts that a company owes to outside parties, including loans, accounts payable, mortgages, and accrued expenses.

Stockholders' Equity

The equity capital that is contributed by shareholders plus the retained earnings of the company. It represents the residual value of assets after liabilities have been settled.