Which of the Following Statements Correctly Reflects the Rules Regarding

question 134

Multiple Choice

Which of the following statements correctly reflects the rules regarding proportionate liquidating distributions?

• A)Relief of liabilities is treated as a distribution of cash but only to the extent that the cash distribution does not exceed the partner's basis in the partnership interest.
• B)A partner's basis in distributed unrealized receivables is the lesser of the partnership's basis in the receivables or their fair market value.
• C)The basis of unrealized receivables cannot be stepped up to their fair market value unless the partner has adequate unabsorbed basis.
• D)Assets are deemed distributed in the following order: cash, unrealized receivables and inventory and finally, capital assets.
• E)The partner can recognize gain, but not loss, on a proportionate liquidating distribution.

---

Definitions:

Exploiting

Utilizing resources or people in an unfair manner for one's own advantage or benefit.

Vertical Integration

A strategy where a company expands its operations into different stages of production within its industry, from raw materials to final product sales.

Gold Mine

A gold mine is a site used for extraction of gold from the earth, and metaphorically, it refers to a rich or valuable resource that promises significant returns or advantages.

Hierarchical

Pertaining to a system or organization where individuals or entities are ranked according to levels of importance or authority.