Which of the Following Statements Regarding a Partner's Basis Adjustments

question 31

Multiple Choice

Which of the following statements regarding a partner's basis adjustments is true?

• A) A partner's basis may never be reduced below zero.
• B) A partner must adjust his basis for ordinary income (loss) but not for separately-stated items.
• C) A partnership fine or penalty does not affect a partner's basis.
• D)Relief of partnership debt increases a partner's tax basis.

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Definitions:

Fair Value

A measure of the price at which an asset or liability could be exchanged in a current transaction between willing parties.

IASB

The International Accounting Standards Board, an independent body that develops and approves International Financial Reporting Standards (IFRS).

FASB

Stands for Financial Accounting Standards Board, which is responsible for establishing and improving financial accounting and reporting standards in the United States.

Note Receivable

A written promise to receive a specific amount of money at a future date.