THERE IS A PARTNERSHIP OF THREE NEPHROLOGISTS, WHO OPERATE A DIALYSIS CLINIC. THE THREE PHYSICIANS ARE LICENSED AS DOCTORS IN PENNSYLVANIA, AS REQUIRED BY PA LAW THE PARTNERS (A, B & C SHARE PROFITS AND LOSSES EQUALLY THEIR CAPITAL ACCOUNTS ARE $30,000, $40,000 & $50,000 RESPECTIVELY PARTNER C DIES SUDDENLY. THE PARTNERSHIP AGREEMENT SPECIFIES THAT UPON THE DEATH OF A PARTNER WHILE ACTIVELY ENGAGED IN THE BUSINESS, $100,000 SHALL BE PAID BY THE PARTNERSHIP TO THE SPECIFIED BENEFICIARY OF THE DECEASED PARTNER. UNTIL THE A,B,C PARTNERSHIP WINDS UP ITS AFFAIRS, PROFITS AND LOSSES ARE SHARED EQUALLY BY A B & THE ESTATE OF C FORTUNATELY, THE PARTNERSHIP HAS LIFE INSURANCE POLICIES ON EACH PARTNER WITH A FACE VALUE OF $100,000 EACH THE PARTNERSHIP IS THE OWNER AND BENEFICIARY OF THE POLICIES. THE PARTNERSHIP COLLECTS THE $100,000 FROM THE INSURANCE COMPANY (TAX-FREE), AND THEN USES THE MONEY TO PAY OFF THE BENEFICIARY OF PARTNER WHEN DIES THERE IS A TECHNICAL TERMNATION OF THE A, B, C PARTNERSHIP THE BENEFICIARY OF C DOES NOT BECOME A PARTNER SINCE HE/SHE IS NOT A DOCTOR AND A & B DO NOT WANT TO ACCEPT THIS PERSON AS A PARTNER SO TECHNICALLY FOR GAAP PURPOSES A NEW PARTNERSHIP OF A & B IS FORMED AND THEY EXECUTE A NEW PARTNERSHIP AGREEMENT BETWEEN THEMSELVES. THIS NEW AGREEMENT IS BASED ON THE TERMS AGREED UPON BY A&B. AS A SIDE NOTE - THE TAX TREATMENT MAY VARY SLIGHTLY FROM THE GAAP TREATMENT IN THIS CASE SELECT THE BEST ANSWER! Multiple Choice THERE IS A PARTNERSHIP OF THREE NEPHROLOGISTS, WHO OPERATE A DIALYSIS CLINIC. THE THREE PHYSICIANS ARE LICENSED AS DOCTORS IN PENNSYLVANIA, AS REQUIRED BY PA LAW THE PARTNERS (A, B & C SHARE PROFITS AND LOSSES EQUALLY THEIR CAPITAL ACCOUNTS ARE $30,000, $40,000 & $50,000 RESPECTIVELY PARTNER C DIES SUDDENLY. THE PARTNERSHIP AGREEMENT SPECIFIES THAT UPON THE DEATH OF A PARTNER WHILE ACTIVELY ENGAGED IN THE BUSINESS, $100,000 SHALL BE PAID BY THE PARTNERSHIP TO THE SPECIFIED BENEFICIARY OF THE DECEASED PARTNER. UNTIL THE A,B,C PARTNERSHIP WINDS UP ITS AFFAIRS, PROFITS AND LOSSES ARE SHARED EQUALLY BY A B & THE ESTATE OF C FORTUNATELY, THE PARTNERSHIP HAS LIFE INSURANCE POLICIES ON EACH PARTNER WITH A FACE VALUE OF $100,000 EACH THE PARTNERSHIP IS THE OWNER AND BENEFICIARY OF THE POLICIES. THE PARTNERSHIP COLLECTS THE $100,000 FROM THE INSURANCE COMPANY (TAX-FREE), AND THEN USES THE MONEY TO PAY OFF THE BENEFICIARY OF PARTNER WHEN DIES THERE IS A TECHNICAL TERMNATION OF THE A, B, C PARTNERSHIP THE BENEFICIARY OF C DOES NOT BECOME A PARTNER SINCE HE/SHE IS NOT A DOCTOR AND A & B DO NOT WANT TO ACCEPT THIS PERSON AS A PARTNER SO TECHNICALLY FOR GAAP PURPOSES A NEW PARTNERSHIP OF A & B IS FORMED AND THEY EXECUTE A NEW PARTNERSHIP AGREEMENT BETWEEN THEMSELVES. THIS NEW AGREEMENT IS BASED ON THE TERMS AGREED UPON BY A&B. AS A SIDE NOTE - THE TAX TREATMENT MAY VARY SLIGHTLY FROM THE GAAP TREATMENT IN THIS CASE SELECT THE BEST ANSWER! Multiple Choice
