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:

Parol Evidence

The rule that bars oral testimony or prior written agreements that contradict or modify the terms of a written contract.

Integrated Document

A combined document that merges several related materials into one cohesive file, often for clarity and comprehensive understanding.

Ambiguous

Lacking clear definition or form, often leading to confusion or multiple interpretations.

Parol Evidence Rule

is a principle in contract law that prevents parties from presenting extrinsic evidence of conversations, agreements, or documents to alter or contradict the terms of a written contract.