On a Nonliquidating Distribution of Cash from a Partnership, the Partner

question 65

Multiple Choice

On a nonliquidating distribution of cash from a partnership, the partner will recognize gain if
I.the cash distributed exceeds his/her basis in the partnership.
II.the cash distributed exceeds his/her share of the net income of the partnership for the year.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Machine-Hours

A measure of production output or activity calculated as the total hours that machines are operated over a specific period.

Standard Hours Allowed

The amount of work time allowed for the completion of a task, against which actual hours are compared for performance analysis.

Direct Labor-Hours

Total time directly invested in the creation of a product or the provision of a service.

Variable Overhead Efficiency Variance

A measure used to evaluate the efficiency of variable overhead resources used in production relative to the standard consumption expected.