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safezone safezone
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7 years ago
On December 31, Kate sells her 20% interest (with a basis of $18,000 which, of course, includes a share of partnership liabilities) in the KLM Partnership to Karl for $27,000 cash plus assumption of her $6,000 share of liabilities. On that date, the partnership has the following balance sheet:

Assets   Basis   Fair Market Value
Cash
Accounts receivable
Inventory
Land
Total   $30,000 
-0-
15,000
45,000
$90,000     $ 30,000   
20,000
25,000
90,000
$165,000   

Equities   Basis   Fair Market Value
Notes payable
Kate, capital
Lynn, capital
Mark, capital
Total   $30,000   
12,000
24,000
24,000
$90,000     $ 30,000   
27,000
54,000
54,000
$165,000   

What are the amount and character of the gain that Kate must recognize on the sale?
Textbook 
Prentice Hall's Federal Taxation 2014 Corporations, Partnerships, Estates & Trusts

Prentice Hall's Federal Taxation 2014 Corporations, Partnerships, Estates & Trusts


Edition: 27th
Authors:
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genflynngenflynn
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7 years ago
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We have the most crude accounting tools. It's tragic because our accounts and our national arithmetic doesn't tell us the things that we need to know.

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