Which of the Following Statements Is True Regarding Partnership Operating

question 67

Multiple Choice

Which of the following statements is true regarding partnership operating distributions?

• A)Partners will never recognize a gain on an operating distribution.
• B)Partners receiving a distribution of property other than money will take a basis in the property equal to its fair market value.
• C)Partners will never recognize a loss on an operating distribution.
• D)None of these statements is truE.See discussion on operating distributions in the text.

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Definitions:

Interest Expense

Cost incurred by an entity for borrowed funds, which may include payments on loans, bonds, and lines of credit.

Tax Rate

The proportion of income that the government takes from a person or company as taxes.

Incremental Cash Flow

The additional cash flow generated by a company as a result of engaging in a specific project or activity.

Cannibalization

The loss of sales of an existing product due to the introduction of a new product by the same company.