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:

Zone of Saturation

The area beneath the Earth's surface where all the pores and fractures of the rock are filled with water.

Permeability

A measure of how easily fluids can flow through a porous material, such as rocks or soil, due to the presence of interconnected void spaces.

Loosely Cemented Sand

Sand particles that are weakly bound together by a mineral matrix, which can easily erode or change shape under physical stress.

Volcanic Rock

Rock formed from magma erupted from a volcano or solidified on the surface of the earth.