Jason is a 25 percent partner in the JJM Partnership when he sells his entire interest to Lavelle for $76,000.At the time of the sale, Jason's basis in JJM is $87,000.JJM does not have any debt or hot assets.Jason will recognize a gain of $11,000 on the sale of his partnership interest.

Question

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According to the information given, Jason's basis in the partnership was $87,000 and he sold his entire 25% interest for $76,000. This means he will recognize a loss of $11,000 ($76,000 - $87,000), not a gain.

Jason Is a 25 Percent Partner in the JJM Partnership