In a Proportionate Liquidating Distribution in Which the Partnership Is

question 35

True/False

In a proportionate liquidating distribution in which the partnership is also liquidated, Ralph received cash of $30,000, accounts receivable (basis of $0 and fair market value of $20,000), and a desk (basis of $0 and fair market value of $1,000). Immediately before the distribution, Ralph's basis in the partnership interest was $40,000. Ralph realizes and recognizes a loss of $10,000, and his basis is $0 in both the accounts receivable and the desk.

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Definitions:

Held-To-Maturity

Held-to-maturity refers to investment securities that a company has the intent and ability to hold until a specified maturity date.

GAAP

A collection of norms and guidelines utilized in the United States for the purposes of financial reporting and accounting, known as the Generally Accepted Accounting Principles.

Available-For-Sale

A classification of financial assets indicating that they are not held for trading purposes nor intended to be held to maturity, but are available for sale if needed.

Disclosures

A requirement for companies to present all relevant financial and operational information in their financial reports to ensure transparency and fairness.