A Partnership Has Accounts Receivable with a Basis of $0

question 13

True/False

A partnership has accounts receivable with a basis of $0 and a fair market value of $10,000 and depreciation recapture potential of $15,000.All other assets of the partnership are either cash,capital assets,or § 1231 assets.If a purchaser acquires a 30% interest in the partnership from another partner,the selling partner will be required to recognize ordinary income of $7,500.

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Definitions:

Attachment

The legal process of seizing a debtor's property to secure or satisfy a judgment.

Remedy

The means by which a right is enforced or the violation of a right is prevented, compensated, or corrected in law.

Secured Creditors

Creditors who have a legal right to seize collateral if the borrower defaults on the loan associated with that collateral.

Attach Property

The legal process by which a court grants a creditor the right to seize property of a debtor for the fulfillment of a judgment.