Aaron Owns a 30% Interest in a Continuing Partnership

question 30

Multiple Choice

Aaron owns a 30% interest in a continuing partnership. The partnership distributes a $35,000 year-end cash bonus 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:

Anxiety

Experiencing uneasiness, tension, or fear because of an event with an unknown conclusion.

Depression

A common but serious mood disorder that affects how a person feels, thinks, and handles daily activities.

Preparedness

The concept in psychology that suggests organisms are innately predisposed to form certain associations or learn particular kinds of behaviors.

Stimuli

External or internal events or occurrences that elicite a response from the sensory system of an organism.