Which of the Following Statements Regarding Capital and Profit Interests

question 36

Multiple Choice

Which of the following statements regarding capital and profit interests received for services contributed to a partnership is false?

• A)The holding period of a capital or profits interest begins on the date the interest is received.
• B)Partners receiving capital interests must recognize the liquidation value of their capital interests as capital gain.
• C)Partners receiving only profits interests generally don't recognize income when the profits interest is received.
• D)Partners receiving only profits interests include their share of partnership debt in the tax basis of their partnership interest.

---

Definitions:

Atomic

Relates to atoms, the smallest constituent units of ordinary matter, or denotes something basic and indivisible in a particular context.

Truth-functional Compound

A complex statement in logic that is determined to be true or false based entirely on the truth values of its component statements.

Quantifier

A logical symbol or word used in mathematics and logic to specify the quantity of specimens in the domain of discourse.

Compound

A substance made from two or more elements chemically bonded together.