Question

true and false questions

A redemption is always "essentially equivalent to a dividend" where a corporation's sole stockholder causes part of his shares to be redeemed by the corporation.

When a partner receives a cash distribution from a partnership the partner always recognizes a gain on such distribution.

If a partner receives a non-liquidating cash distribution, the partner will recognize a loss if the cash distributed is less than the partner's outside basis at the time of the distribution.

When a partner’s share of partnership liabilities and debts is reduced or relieved, such reduction or relief is treated as a deemed cash distribution which increases the partner’s outside basis.

A partner contributes property used in a trade or business to a partnership in return for a partnership interest. The partner held the property for 2 years prior to contribution. The partner then sells his partnership interest three weeks later. The contributing partner will realize a short-term capital gain/loss on the sale of his partnership interest.

A distribution by a C-corporation that has Earnings and Profits is always a dividend.

John is a 30% partner in the ABC Partnership with an outside basis of $42,000. ABC partnership distributes $15,000 of cash in complete liquidation of John’s interest. John recognizes an ordinary loss of $27,000 on the distribution

Like partnerships, an S corporation shareholder's stock basis must be adjusted annually.

A related party individual that receives a liquidating distribution from a corporation can recognize a loss

If a partnership makes a non-liquidating distribution of tangible property, and the inside basis of the property exceeds the outside basis of the recipient-partner, the partner’s basis in the distributed property is equal to his outside basis and he realizes gain on the difference between the inside basis and outside basis.

Answer 1

A redemption is always "essentially equivalent to a dividend" where a corporation's sole stockholder causes part of his shares to be redeemed by the corporation. : False

When a partner receives a cash distribution from a partnership the partner always recognizes a gain on such distribution: False, only when distribution exceeds the basis of her partnership interest gain is recognized

If a partner receives a non-liquidating cash distribution, the partner will recognize a loss if the cash distributed is less than the partner's outside basis at the time of the distribution.: True

When a partner’s share of partnership liabilities and debts is reduced or relieved, such reduction or relief is treated as a deemed cash distribution which increases the partner’s outside basis.: False, it reduces the outside basis

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