Identify which of the following statements is true.
A)If a partner sells property received in a partnership distribution for a gain and the property was inventory in the hands of the distributing partnership, the partner will always recognize ordinary income.
B)The primary purpose of Sec. 751 is to prevent partnerships from converting capital gains into ordinary income.
C)Unrealized receivables include rights to payments on the sale of a capital asset.
D)All of the above are false.

Question

Quizplus · Accepted Answer

The correct statement is D because: A) is false as the character of the gain to the partner depends on the partner's use of the property and holding period, not solely on its character in the hands of the partnership. B) is incorrect because Sec. 751's primary purpose is actually to prevent the conversion of ordinary income into capital gains, not the other way around. C) is false because unrealized receivables generally include rights to payment for services or for the sale of inventory items, not capital assets.

Identify Which of the Following Statements Is True