Serena owns a 40% interest in the RST LLP. Partnership assets consist of land fair market value of $100,000, basis of $80,000), accounts receivable fair market value of $120,000, basis of $0), and cash of $180,000. Serena sells her interest in RST to Jaclyn for cash of $140,000. In addition, Jaclyn assumes Serena's $40,000 share of the LLP's liabilities. Serena's basis in the partnership interest including her share of the partnership's liabilities) is $120,000 immediately before the sale.
a. How much gain or loss does Serena recognize and what is its character?
b. What is Jaclyn's basis in the partnership interest?
c. If the LLP has a § 754 election in effect, how much is the adjustment and to which partners) is it allocated?

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The Answer of Serena owns a 40% interest in the RST LLP. Partnership assets consist of land fair market value of $100,000, basis of $80,000), accounts receivable fair market value of $120,000, basis of $0), and cash of $180,000. Serena sells her interest in RST to Jaclyn for cash of $140,000. In addition, Jaclyn assumes Serena's $40,000 share of the LLP's liabilities. Serena's basis in the partnership interest including her share of the partnership's liabilities) is $120,000 immediately before the sale.
a. How much gain or loss does Serena recognize and what is its character?
b. What is Jaclyn's basis in the partnership interest?
c. If the LLP has a § 754 election in effect, how much is the adjustment and to which partners) is it allocated?

Serena Owns a 40% Interest in the RST LLP