The SSC Partnership balance sheet includes the following assets on December 31 of the current year: Which of SSC's assets are considered hot assets under §751(a)?

Question

The SSC Partnership balance sheet includes the following assets on December 31 of the current year:  Which of SSC's assets are considered hot assets under §751(a)?

Quizplus · Accepted Answer

Assets that could potentially lead to ordinary income upon sale are considered hot assets under §751(a). Inherent recapture under §1245 in equipment is a hot asset because it would result in ordinary income upon sale. Cash, accounts receivable, and land are not considered hot assets as they would result in capital gains upon sale.

The SSC Partnership Balance Sheet Includes the Following Assets on December