A Partner Will Recognize a Loss from a Liquidating Distribution

question 6

True/False

A partner will recognize a loss from a liquidating distribution when the distribution includes only cash, unrealized receivables, and inventory and the partner's outside basis is less than the sum of the bases of the distributed assets.
The partner's outside basis must be greater than the sum of the inside bases of the distributed assets for loss recognition.

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Definitions:

Inflation

The velocity of rise in the aggregate pricing of goods and services, reducing the power of the dollar.

Dividends

Regular payments declared by a company's board of directors and given to its shareholders from the company's earnings.

Standard Deviation

A statistical measure of the dispersion or variability in a dataset, signifying the degree to which individual observations differ from the mean value.