Carlos Receives a Proportionate Liquidating Distribution Consisting of $8,000 Cash

question 26

True/False

Carlos receives a proportionate liquidating distribution consisting of $8,000 cash and inventory with a basis to the partnership of $5,000 and a fair market value of $6,000.His basis in his partnership interest was $15,000 immediately before the distribution.Carlos assigns a basis of $5,000 to the inventory, and recognizes a $2,000 capital loss.

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Definitions:

Marginal Revenue

Marginal revenue is the additional income earned from selling one more unit of a good or service.

Marginal Cost

The change in total cost that arises when the quantity produced changes by one unit; essentially the cost of producing one additional unit of a good or service.

Price-Taker Firm

A firm that has no control over the market price and must accept the prevailing market price for its product.

Marginal Cost

The expense associated with manufacturing an extra unit of a product or service.