Which of the Following Statements About Partnerships Is True

question 25

Multiple Choice

Which of the following statements about partnerships is true?

• A)Partnerships must file their tax returns on a calendar year basis.
• B)No gain or loss is ever recognized in transactions between partners and a partnership.
• C)Gain is never recognized by a partner on a contribution of property to a partnership.
• D)A partner's original basis in a partnership interest is equal to the basis of the property transferred (plus cash contributed) to the partnership, adjusted for any gain recognized on the transfer and reduced for liabilities assumed by the other partners.
• E)The partnership's basis in property contributed by a partner is equal to the fair market value of the property on the date of the transfer.

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Definitions:

Apparent Authority

A form of authority that a third party reasonably believes an agent has due to the actions of the principal, even if the agent does not have actual authority.

General Sales Agent

An individual or company authorized to sell or distribute a manufacturer's products in a specific area or market.

Express or Implied Authority

Power granted by a principal to an agent, which can be explicitly stated (express) or inferred from actions, circumstances, or job title (implied).

Disclosed Principal

In the realm of agency law, a principal whose identity the third party is aware of when the agent enters into a contract with that third party.