Question: True or False Tracey has a $10,000 basis in her partnership interest. At the end of the year, she is allocated $5,000 of partnership profits

True or False

Tracey has a $10,000 basis in her partnership interest. At the end of the year, she is allocated $5,000 of partnership profits and is given a cash distrbution of $13,000. Tracey will have a capital gain of $3,000 on the distrbution because it exceeds her $10,000 basis and will also recognize $5,000 of ordinary income

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