Loss cannot be recognized on a distribution from a partnership unless cash, unrealized receivables, and/or § 1231 assets are the only items distributed
a. True
b. False
Indicate whether the statement is true or false
False
RATIONALE: A loss can only be recognized on a distribution in which cash, unrealized receivables and/or inventory are the only items distributed, and the distribution is a liquidating distribution. In addition, the inside basis of the assets distributed must be less than the distributee partner's outside basis of the partnership interest immediately before the distribution.
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