9. Which, if either, of the following statements is or are false? Tax exempt inc

Question

9.   Which, if either, of the following statements is or are false?

Tax exempt income received by a partnership, for example, municipal bond interest, does not increase a partner’s basis in his/her partnership interest because the income is not taxable.

A partner who receives a current property distribution (other than cash), made pro rata to all the partners, will not have to report a gain with respect to the distribution.

a.         I only

b.         II only

c.          Both I and II

d.         Neither I nor II

Explanation / Answer

Which, if either, of the following statements is or are false?

I.Tax exempt income received by a partnership, for example, municipal bond interest, does not increase a partner’s basis in his/her partnership interest because the income is not taxable.

II.A partner who receives a current property distribution (other than cash), made pro rata to all the partners, will not have to report a gain with respect to the distribution.

Ans:

c.          Both I and II

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