Q1.- The book basis tracks each partner's capital account based on _____________ and reflects the _______of assets at the time they are contributed.

A.- Generally accepted accounting principals; adjusted basis.

B.- Generally accepted tax principals; FMV.

C.- How items are recognized on the partnership tax return; adjusted basis.

D.- How items are defined by the Internal Revenue Service; FMV.

Q2.- Items added to a partner's Schedule K-1 that are recognized as defined by the Internal Revenue Code are part of the calculation of a partner's ______________.

A.- Ordinary income (or loss).

B.- ax basis, or inside basis.

C.- Outside, or book, basis.

D.- Distributive share.