Calvin purchased a 30% partnership interest for $53,000 in March 2012.Calvin's share of partnership income was $5,000 in 2012,$25,000 in 2013,and $(9,000)in 2014.Calvin made no additional contributions to,or withdrawals from,the partnership.On December 1,2014,Calvin sold his partnership interest for $83,000.What is Calvin's gain or loss on the disposal?

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Quizplus · Accepted Answer

Calvin's basis in his partnership interest is $53,000. He sold his interest for $83,000, so he has a gain of $30,000. However, he is only taxed on his share of the partnership's income, which was $5,000 in 2012, $25,000 in 2013, and $(9,000) in 2014. His total share of partnership income is $21,000. This means that his taxable gain is $30,000 - $21,000 = $9,000.

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