Exam 3 Review Chapter 10

Question 1

Partners may dispose of their interest in a partnership in several ways

Answer 1

• Sell to a third party
• Sell to another partner
• Transfer the interest back to the partnership

Question 2

Hot Assets

Answer 2

A portion of the gain or loss will be ordinary if a seller realizes any amounts attributable to unrealized receivables or inventory items which are referred to as hot assets

Question 3

Unrealized receivables

Answer 3

include the right to receive payment for “goods delivered, or to be delivered” or “services rendered, or to be rendered.”

Question 4

What do inventory items include for Hot Asset

Answer 4

classic inventory, defined as property held for sale to customers in the ordinary course of business. Inventory items can also include any assets that are not cash, capital assets or §1231 assets.