Identify which of the following statements is true.
A)John Albin is a retired partner of Brill & Crum, a personal service partnership. Albin has not rendered any services to Brill & Crum since his retirement six years ago. Under the provisions of Albin's retirement agreement, Brill & Crum is obligated to pay Albin 10% of the partnership's net income each year through the end of the current year. In compliance with the agreement, Brill & Crum pay Albin $25,000 in the current year. Albin should treat this $25,000 as a long-term capital gain.
B)An exchange of partnership interests in different partnerships qualifies under the like-kind exchange rules.
C)The payment for partnership property to a retiring partner is not deductible by the partnership and often not income to the retiring partner.
D)All of the above are false.

Question

Quizplus · Accepted Answer

This statement is true according to the tax rules related to partnership distributions to retiring partners. Option A is false since payments made to a retiring partner are usually treated as ordinary income and not long-term capital gains. Option B is false because like-kind exchange rules only apply to real property or tangible personal property, not partnership interests. Option D is false because Option C is true.

Identify Which of the Following Statements Is True