Calvin purchased a 30% partnership interest for $53,000 in March 2015.Calvin's share of partnership income was $5,000 in 2015,$25,000 in 2016,and ($9,000)in 2017.Calvin made no additional contributions to,or withdrawals from,the partnership.On December 1,2017,Calvin sold his partnership interest for $83,000.What is Calvin's gain or loss on the disposal?

Question

Quizplus · Accepted Answer

Calvin's initial investment was $53,000. His share of partnership income over the years was $5,000 + $25,000 - $9,000 = $21,000. Therefore, his adjusted basis in the partnership before selling was $53,000 + $21,000 = $74,000. Selling the partnership interest for $83,000 results in a gain of $83,000 - $74,000 = $9,000.

Calvin Purchased a 30% Partnership Interest for $53,000 in March