True/ False

1.Any partnership debt that is allocated to another partner is treated as deemed cash contribution

2. Interest on tax exempt municipal bonds increases a corporations Earnings and Profits

3. ABC Corporation has 2,000 shares of stock which are owned as follows:

Paul, 800 shares;

Sandra (Pauls sister), 800 shares; and

Greta (Pauls granddaughter), 400 shares.

During the current year, ABC Corporation (E & P of $1 million) redeemed 600 shares of Pauls stock for $100,000. If Paul had acquired the 600 shares five years ago for $30,000, he will have a long-term capital gain of $70,000 from the redemption