The SSC, a cash-method partnership, has a balance sheetthat includes the following assets on December 31 of the current year: Susan, a one-third 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?
A) $30,000 ordinary income.
B) $30,000 capital gain.
C) $10,000 ordinary income; $20,000 capital gain.
D) $10,000 capital gain; $20,000 ordinary income.

Question

The SSC, a cash-method partnership, has a balance sheetthat includes the following assets on December 31 of the current year:  Susan, a one-third 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?
A) $30,000 ordinary income. 
B) $30,000 capital gain. 
C) $10,000 ordinary income; $20,000 capital gain. 
D) $10,000 capital gain; $20,000 ordinary income.

Quizplus · Accepted Answer

The Answer of The SSC, a cash-method partnership, has a balance sheetthat includes the following assets on December 31 of the current year:  Susan, a one-third 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?
A) $30,000 ordinary income. 
B) $30,000 capital gain. 
C) $10,000 ordinary income; $20,000 capital gain. 
D) $10,000 capital gain; $20,000 ordinary income.

The SSC, a Cash-Method Partnership, Has a Balance Sheetthat Includes