Federico is a 30% partner in the FRM Partnership when he sells his entire interest to Maria for $98,000. At the time of the sale, Federico's basis in FRM is $74,000. FRM does not have any debt. In addition, FRM's assets include accounts receivable with zero tax basis and $21,000 fair market value at the date of the sale. The remaining assets of the partnership are capital and §1231assets. Federico will recognize ordinary income of $24,000 on the sale of his partnership interest.

Question

Quizplus · Accepted Answer

Federico would recognize ordinary income of $6,300 ($21,000 × 0.30) and capital gain of $17,700 on the sale ($98,000 - $74,000 - $6,300).

Federico Is a 30% Partner in the FRM Partnership When