Which of the following statements is true regarding partnership operating distributions?
A)Partners will never recognize a gain on an operating distribution.
B)Partners receiving a distribution of property other than money will take a basis in the property equal to its fair market value.
C)Partners will never recognize a loss on an operating distribution.
D)None of the statements are true.

Question

Quizplus · Accepted Answer

Partners generally do not recognize a loss on an operating distribution. This is because the distribution is typically viewed as a return of capital, and losses are not recognized until the partnership is liquidated or the partner's interest is completely liquidated.

Which of the Following Statements Is True Regarding Partnership Operating