True/False

1. Jimmy has an outside basis of $250,000. Jimmy receives a non-liquidating cash distribution of $25,000. Jimmys basis is reduced to $200,000 and he does not recognize any gain on the distribution.

2. A business engaged in the sale of stocks and bonds for investment purposes only can elect out of Subchapter K.

3. The IRS will respect the allocations set forth in a partnership agreement so long as the allocations have substantial economic effect.

4. A partner that contributes built-in gain property will not be allocated the built-in gains upon the sale of the property if the partnership waits 7 years to sell the property from date of distribution.