Outside basis is adjusted at the end of the tax year. T OR F

. A partner receives a distribution of cash, inventory and a vehicle. His outside basis is first allocated to the inventory, then to the cash and then to the vehicle. T OR F Any partnership debt that is allocated to another partner is treated as deemed cash contribution. T OR F

Bobby owns 60 percent of the stock of ABC Corporation. Unrelated individuals own the remaining 40 percent. For a stock redemption to be treated as an exchange under the "substantially disproportionate" rule, the redemption must reduce Bobby's stock ownership below 48 percent T OR F

A partner can apply any passive activity losses against any passive activity income for the year. T OR F

Flow-through S-corporation losses that are not deductible due to loss-limitation rules are suspended and carried forward for 5 years. T OR F

. A shareholder that engages in a stock redemption will generally recognize a capital gain or loss based on the FMV of the property received for the basis of the stock exchanged. T OR F

A partner that receives cash in a non-liquidating distribution recognizes loss if the cash distributed is less than the partner's outside basis in the partnership immediately before the distribution. T OR F

A partner that receives cash in a non-liquidating distribution recognizes gain if the cash distributed exceeds the partner's outside basis in the partnership immediately before the distribution. T OR F

Capital accounts reflect a partners value in the partnership, but unlike outside basis, do not include allocable liabilities in its calculation. T OR F

A complete redemption of stock is always treated as a sale or exchange unless a waivable activity occurs. T OR F

. Nonrecourse debt is generally allocated according to the profit-sharing ratios of the partnership. T OR F

A disproportionate distribution of hot assets is treated as though the partnership distributes a proportionate share of hot assets to the partner and then the partner sells those hot assets back to the partnership at fair market value in exchange for a portion of the assets actually received in the distribution. T OR F

A partner recognizes gain when he receives cash in excess of his outside basis in a liquidating distribution. T OR F