Identify which of the following statements is true.
A)The partnership tax year closes when a partner transfers his interest by gift.
B)If a partner dies in a two-member partnership, the partnership terminates on the date of death, even though the successor-in-interest continues to share in the profits and losses of the partnership business.
C)When the interest of a partner who owns 60% of a partnership is completely liquidated by a partnership distribution, the partnership is considered terminated, even though three other partners remain.
D)All of the above are false.

Question

Quizplus · Accepted Answer

The statements provided are all false based on the U.S. Internal Revenue Code and regulations governing partnerships. A) The partnership tax year does not close simply because a partner transfers his interest by gift. B) The death of a partner does not automatically terminate a partnership, especially in a two-member partnership where the business can continue with the successor-in-interest. C) The complete liquidation of a partner's interest (even if it's 60%) does not terminate the partnership if other partners remain and continue the business.

Identify Which of the Following Statements Is True