Jason sold his 40% interest in the HIJ Partnership to Kim for $280,000.The inside basis of all partnership assets was $600,000 at the time of the sale.If the partnership makes a § 754 election,it will record a $40,000 step-up in the basis of the partnership assets,and the step-up will be attributed solely to Kim.

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The step-up related to the sale of the partnership interest is calculated as the difference between Kim's purchase price for the partnership interest ($280,000)and her 40% share of the inside basis of partnership assets.The step-up is $40,000 ($280,000 - $240,000)and is allowed solely to Kim.

Jason Sold His 40% Interest in the HIJ Partnership to Kim