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15 December, 18:54

Samantha, a one-third partner, has an adjusted basis of $90,000 for her partnership interest. If Samantha sells her entire partnership interest to Emma for $100,000 cash, what is the amount and character of Samantha's gain or loss from the sale?

a. $10,000 capital gain.

b. $10,000 ordinary income.

c. $20,000 ordinary income; $10,000 capital gain.

d. $10,000 capital loss; $20,000 ordinary income.

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  1. 15 December, 21:51
    0
    Correct option is D.

    $10,000 capital loss; $20,000 ordinary income.

    Explanation:

    Samantha's share of unrealized receivables is $20,000 ($60,000 unrealized receivables * 1/3 interest). Susan will recognize $20,000 of ordinary income and a $10,000 capital gain determined as the difference between the total gain of $30,000 and the ordinary income of $20,000.
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