Match Each of the Following Statements with the Terms Below

question 70

Multiple Choice

Match each of the following statements with the terms below that provide the best definition.
-Economic effect test

• A)Adjusted basis of each partnership asset.
• B)Operating expenses incurred after entity is formed but before it begins doing business.
• C)Each partner's basis in the partnership.
• D)Reconciles book income to taxable income.
• E)Tax accounting election made by partnership.
• F)Tax accounting calculation made by partner.
• G)Tax accounting election made by partner.
• H)Does not include liabilities.
• I)Designed to prevent excessive deferral of taxation of partnership income.
• J)Amount that may be received by partner for performance of services for the partnership.
• K)Theory under which a partnership's recourse debt is shared among the partners.
• L)Will eventually be allocated to partner making tax-free property contribution to partnership.
• M)Partner's share of partnership items.
• N)Must generally be satisfied by any allocation to the partners.
• O)Justification for a tax year other than the required taxable year.
• P)No correct match is provided.

---

Definitions:

Cost-push Inflation

Inflation caused by an increase in production costs, such as raw materials and wages, which leads to a decrease in the supply of goods and services at the same price levels.

Social Security

A government program that provides financial assistance to individuals who are retired, disabled, or otherwise unable to earn sufficient income through employment.

Nominal Interest Rate

The interest rate unadjusted for inflation, representing the face value rate at which money can be borrowed or saved.

Inflation Rate

A rise in the cost of goods and services in an economy, expressed as a percentage over a certain time frame.