The SSC Partnership balance sheet includes the following assets on December 31 of the current year: Susan, a 1/3 partner, has an adjusted basis of $90,000 for her partnership interest. If Susan sells her entire partnership interest to Emma for $100,000 cash, what is the amount and character of Susan's gain or loss from the sale?

Question

The SSC Partnership balance sheet includes the following assets on December 31 of the current year:  Susan, a 1/3 partner, has an adjusted basis of $90,000 for her partnership interest. If Susan sells her entire partnership interest to Emma for $100,000 cash, what is the amount and character of Susan's gain or loss from the sale?

Quizplus · Accepted Answer

Total gain is $10,000 ($100,000 sales price minus $90,000 basis). Ordinary component is Susan's share of hot assets $20,000. Capital loss of ($10,000) is the $10,000 total gain minus $20,000 ordinary income.

The SSC Partnership Balance Sheet Includes the Following Assets on December