Barry Has a Basis in His Partnership Interest of $50,000

question 17

True/False

Barry has a basis in his partnership interest of $50,000 when the partnership distributes $60,000 in cash to Barry. As a result of the distribution, Barry reduces his basis in the partnership interest to $0, has a $60,000 basis in the cash received, and he recognizes a gain of $10,000 on the distribution.

---

Definitions:

Profit-Maximizing Firm

A company that operates in such a way as to maximize its profits by adjusting output levels based on market conditions.

Marginal Revenue Product

Refers to the additional revenue generated from employing one more unit of a resource or factor of production.

Marginal Resource Cost

The additional cost incurred by acquiring or using one more unit of a resource.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, reflecting a nation's cost of living.