Liabilities assumed by either a partnership or corporation have identical effects on the owners' bases in their ownership interests.

Question

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In a partnership, liabilities assumed by the partnership increase the basis of each partner's interest in the partnership, as they share in the liability. In contrast, for a corporation, shareholders' bases in their stock are not affected by liabilities assumed by the corporation, as shareholders are not personally liable for the corporation's debts.

Liabilities Assumed by Either a Partnership or Corporation Have Identical