On December 22, 2015, Jim Cash, one of two partners, contributed inventory with

Question

On December 22, 2015, Jim Cash, one of two partners, contributed inventory with a basis to him of $15,000 and a fair market value of $30,000 to the partnership of which he was a member. His capital account was credited with $30,000. The property, which was a capital asset in the hands of the partnership, was sold on January 2, 2016 for $18,000. As a result of this sale, what is the amount and character of any gain or loss allocable to Jim?

a. $15,000 capital gain

b. $1,500 capital gain

c. $3,000 ordinary income

d. None of the above

Explanation / Answer

$3,000 ordinary income will be allocable to Jim (18000-15000)

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