Identify Which of the Following Statements Is True

Identify which of the following statements is true.

A) When partners receive cash distributions from the partnership, they pay taxes on those distributions.
B) Distribution of partnership income in the form of cash to partners is generally tax- free to the partners and the partnership.
C) If money distributions exceed the partner's basis in the partnership interest, the partner would have to recognize gain on the distribution from the partnership. Such gain is usually an ordinary gain.
D) All of the above are true.

Correct Answer:

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