On December 1, Antonio, a member of a three- person partnership, purchases investment securities from the partnership for their $37,000 FMV. All partners share profits and losses equally. The securities were acquired by the partnership for $25,000 cash in March of the current year. What amount and character of gain will Antonio recognize because of this transaction?

Question

Quizplus · Accepted Answer

Antonio is buying the securities at their FMV of $37,000, which is $12,000 more than the partnership's cost of $25,000. This $12,000 difference is considered a short-term capital gain for the partnership. Since all partners share profits and losses equally, Antonio's share of the gain is $4,000 ($12,000 divided by 3). This gain is considered a short-term capital gain for Antonio. Therefore, the correct choice is (D).

On December 1, Antonio, a Member of a Three- Person