Joan is a one-third partner in the PDJ Partnership.PDJ Partnership uses the proration method to allocate income and losses to partners with varying interests.On May 1, Joan sells her interest to Freddie for a cash payment of $75,000.On January 1, Joan's basis in PDJ is $57,000.PDJ generates $60,000 of ordinary income and $9,000 of tax-exempt income during the first four months of the year.PDJ has the following assets and no liabilities at the sale date:
$$\begin{array} { c c }
&\text { Basis } & \text { Fair Market Value } \
\text {Cash}&\$ 45,000 & \$ 45,000 \
\text {Land held for irvestrnent}&\$ 45,000 & \$ 90,000
\end{array}$$ What is the amount and character of Joan's gain or loss on the sale?

Question

Joan is a one-third partner in the PDJ Partnership.PDJ Partnership uses the proration method to allocate income and losses to partners with varying interests.On May 1, Joan sells her interest to Freddie for a cash payment of $75,000.On January 1, Joan's basis in PDJ is $57,000.PDJ generates $60,000 of ordinary income and $9,000 of tax-exempt income during the first four months of the year.PDJ has the following assets and no liabilities at the sale date:
 $$\begin{array} { c c } 
&\text { Basis } & \text { Fair Market Value } \
\text {Cash}&\$ 45,000 & \$ 45,000 \
\text {Land held for irvestrnent}&\$ 45,000 & \$ 90,000
\end{array}$$ What is the amount and character of Joan's gain or loss on the sale?

Quizplus · Accepted Answer

The Answer of Joan is a one-third partner in the PDJ Partnership.PDJ Partnership uses the proration method to allocate income and losses to partners with varying interests.On May 1, Joan sells her interest to Freddie for a cash payment of $75,000.On January 1, Joan's basis in PDJ is $57,000.PDJ generates $60,000 of ordinary income and $9,000 of tax-exempt income during the first four months of the year.PDJ has the following assets and no liabilities at the sale date:
 $$\begin{array} { c c } 
&\text { Basis } & \text { Fair Market Value } \
\text {Cash}&\$ 45,000 & \$ 45,000 \
\text {Land held for irvestrnent}&\$ 45,000 & \$ 90,000
\end{array}$$ What is the amount and character of Joan's gain or loss on the sale?

Joan Is a One-Third Partner in the PDJ Partnership What Is the Amount and Character of Joan's Gain or Uses