Which of the Following Statements Is Not a Requirement of the Substantial

question 206

Multiple Choice

Which of the following statements is not a requirement of the substantial economic effect test?

• A) Income, gains, losses, and deductions must be allocated to the partners in accordance with their capital contributions.
• B) An allocation of income must increase the partner's capital account balance, and an allocation of deduction must decrease the partner's capital account balance.
• C) A partner with a negative capital account balance must "restore" that capital account, generally by contributing cash to the partnership.
• D) On liquidation of the partner's interest in the partnership, the partner must receive assets that have a fair market value equal to that partner's (positive) capital account balance.
• E) All of the above statements are requirements of the substantial economic effect test.

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Definitions:

Gene Location

The specific place of a gene within the chromosome, known as its locus.

Environment

The surroundings or conditions in which a person, animal, or plant lives or operates, including both natural and human-made aspects.

Locus

in psychological terms, often refers to locus of control, which is the degree to which individuals believe they have control over the outcome of events in their lives.

Chromosome

A structure found in the nucleus of cells that contains genetic information in the form of DNA.