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as a general partner", "The partnership agreement is silent regarding payment of partnership goodwill", and "The partnership is an entity in which capital is not a material income-producing factor" would have to be true.

as a general partner", "The partnership agreement is silent regarding payment of partnership goodwill", and "The partnership is an entity in which capital is not a material income-producing factor" would have to be true.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The POD Partnership will soon be liquidating the 20% interest of partner Daniel by making a cash distribution of $200,000 to him under § 736. Much of that payment is in return for Daniel's share of partnership goodwill. Which of the following conditions would have to be true to increase the portion of that payment that POD could claim as a current deduction? a. The partnership agreement is silent regarding payment of partnership goodwill. b. Daniel is treated as a general partner. c. The partnership is an entity in which capital is not a material income- producing factor. d. To maximize the partnership's deductions under § 736, "Daniel is treated as a general partner", "The partnership agreement is silent regarding payment of partnership goodwill", and "The partnership is an entity in which capital is not a material income-producing factor" would have to be true.
Transcribed Image Text:The POD Partnership will soon be liquidating the 20% interest of partner Daniel by making a cash distribution of $200,000 to him under § 736. Much of that payment is in return for Daniel's share of partnership goodwill. Which of the following conditions would have to be true to increase the portion of that payment that POD could claim as a current deduction? a. The partnership agreement is silent regarding payment of partnership goodwill. b. Daniel is treated as a general partner. c. The partnership is an entity in which capital is not a material income- producing factor. d. To maximize the partnership's deductions under § 736, "Daniel is treated as a general partner", "The partnership agreement is silent regarding payment of partnership goodwill", and "The partnership is an entity in which capital is not a material income-producing factor" would have to be true.
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