The SSC Partnership balance sheet includes the following assets on December 31 o

Question

The SSC Partnership balance sheet includes the following assets on December 31 of the current year:

Susan, a 1/3 partner, has an adjusted basis of $90,000 for her partnership interest. If Susan sells her entire partnership interest to Emma for $120,000 cash, how much capital gain and ordinary income must Susan recognize from the sale?

Multiple ChoiceL :

$30,000 ordinary income.

$30,000 capital gain.

$10,000 ordinary income; $20,000 capital gain.

$10,000 capital gain; $20,000 ordinary income

Basis FMV Cash $180,000 $180,000 Accounts receivable -0- 60,000 Land 90,000 120,000 Total $270,000 $360,000

Explanation / Answer

Answer:$10,000 capital gain; $20,000 ordinary income

Susan's share of unrealized receivables is $20,000 ($60,000 unrealized receivables ? 1/3 interest). Susan will recognize $20,000 of ordinary income and a $10,000 capital gain determined as the difference between the total gain of $30,000 and the ordinary income of $20,000.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.