Meritt Is a Partner in the McPherson Partnership

question 29

Multiple Choice

Meritt is a partner in the McPherson Partnership. At the close of the current year, Meritt's basis in the partnership is $25,000.
I.If the partnership distributes cash of $7,500 to Meritt, she must report the cash as income.
II.If the partnership distributes property with a basis of $12,000 and a fair market value of $15,000, Meritt must report $3,000 as income.
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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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