During the Current Year the Newport Partnership Is Liquidated

question 42

Multiple Choice

During the current year the Newport Partnership is liquidated. Which of the following statements is correct concerning the liquidation of the partnership?
I.If only cash is distributed by the partnership, the partners must recognize a gain but cannot recognize a loss.
II.Gain is recognized only if the amount of cash and property distributed exceeds the partner's basis in the partnership.
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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:

Insolvent

A financial state in which an individual or entity cannot meet their debt obligations or pay their bills as they become due.

Occupied

Engaged in activity or filled with occupants or participants; also can refer to areas under military control.

Repudiate

To refuse to accept or be associated with; in legal terms, it often refers to rejecting the validity of a contract or agreement.

Non-Necessary

Non-necessary refers to something that is not essential or required for a particular purpose or function.