Which Requirement Must Be Satisfied in Order to Specially Allocate

question 32

Multiple Choice

Which requirement must be satisfied in order to specially allocate partnership income or losses to partners?

• A)Special allocations must have economic effect.
• B)At least one partner must agree to the special allocations.
• C)Special allocations must be insignificant.
• D)Special allocations must reduce the combined tax liability of all the partners.

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Definitions:

Convertible Bonds

Bonds that can be converted into a predetermined number of the issuing company's shares at certain times during the bond's life, usually at the discretion of the bondholder.

Earnings Before Taxes

A company's profitability measure calculated by subtracting all expenses, except taxes, from revenues.

Earnings Per Share

A company's profit divided by its number of outstanding shares of common stock.

Convertible Bond

A type of bond that allows bondholders the option to convert their debt into a predetermined number of shares of the issuing company.