The December 31, 2014, balance sheet of the calendar-year JKL Partnership reads as follows.
Each partner shares in 1/3 of the partnership capital, income, gain, loss, deduction and credit. On December 31, 2014, Jan sells her 1/3 partnership interest to Jennifer for $43,000 cash. Assume the partnership makes a § 754 election for 2014.
a. What is the amount of Jennifer's "stepup" adjustment under § 743(b)?
b. If the nondepreciable capital asset is sold the next year for $120,000, determine the amount of gain that Jennifer will recognize on her tax return because of the sale.

Question

The December 31, 2014, balance sheet of the calendar-year JKL Partnership reads as follows.
  Each partner shares in 1/3 of the partnership capital, income, gain, loss, deduction and credit. On December 31, 2014, Jan sells her 1/3 partnership interest to Jennifer for $43,000 cash. Assume the partnership makes a § 754 election for 2014. 
a. What is the amount of Jennifer's "step­up" adjustment under § 743(b)?
b. If the nondepreciable capital asset is sold the next year for $120,000, determine the amount of gain that Jennifer will recognize on her tax return because of the sale.

Quizplus · Accepted Answer

The Answer of The December 31, 2014, balance sheet of the calendar-year JKL Partnership reads as follows.
  Each partner shares in 1/3 of the partnership capital, income, gain, loss, deduction and credit. On December 31, 2014, Jan sells her 1/3 partnership interest to Jennifer for $43,000 cash. Assume the partnership makes a § 754 election for 2014. 
a. What is the amount of Jennifer's "step­up" adjustment under § 743(b)?
b. If the nondepreciable capital asset is sold the next year for $120,000, determine the amount of gain that Jennifer will recognize on her tax return because of the sale.

The December 31, 2014, Balance Sheet of the Calendar-Year JKL