Which of the Following Statements Is True Regarding the Sale

question 45

Multiple Choice

Which of the following statements is true regarding the sale of a partnership interest?

• A)The selling partner's share of partnership liabilities is disregarded in determining the proceeds from the sale of a partnership interest.
• B)For purposes of computing the selling partner's gain or loss, the partner's basis in the partnership interest is determined as of the last day of the partnership tax year ending before the year in which the interest is sold.
• C)If a partner sells an interest in a partnership, income related to that interest for the year of the sale is allocated to the purchaser.
• D)The selling partner could be required to report both ordinary income and a capital loss on sale of the partnership interest.
• E)The partner's share of partnership "hot assets" is disregarded in determining the character of the partner's gain on the sale of the partnership interest.

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Definitions:

Argument By Analogy

A form of reasoning where a similarity between two different things is used to draw a conclusion or make a point about one of them.

Similarity

The state or fact of being similar; resemblance or likeness in qualities, characteristics, or appearance.

Single Example

A specific instance or case used to illustrate a general concept or principle.

Inductive Generalization

A method of reasoning in which conclusions are drawn about generalities from specific instances.