Question 31 of 75. Which statement regarding book capital accounts and the tax capital account is...
Question 31 of 75.
Which statement regarding book capital accounts and the tax capital account is incorrect?
A. Both can have a negative balance.
B. The book capital account and the tax capital account may vary due to depreciation.
C. The book capital account reflects adjusted basis while the tax capital account reflects the fair market value.
D. The book capital account and the tax capital account may vary because of a revaluation of assets.
Homework Answers
C. The book capital account reflects adjusted basis while the tax capital account reflects the fair market value.
Explanation: The book capital account reflects with the credit amount of cash and the fair market value of property contributed to the partnership and debited by the amount of cash and fair market value of property distributed.
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Question 31 of 75.
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