Maxine has a 65% interest in a partnership.Maxine sells land to the partnership for $60,000.Prior to the sale,the land had a FMV of $60,000 and an adjusted basis of $90,000 to Maxine.Later,the partnership sells the land to an outsider for $110,000.The partnership must report a gain of

Question

Quizplus · Accepted Answer

The partnership must report a gain of $20,000, which is the difference between the selling price to the outsider ($110,000) and the FMV at the time of the sale to the partnership ($90,000). The loss Maxine had on the sale to the partnership is not recognized due to her substantial interest in the partnership.

Maxine Has a 65% Interest in a Partnership