At the end of last year, Daniel, a 25% partner in the Summit Consulting Partnership, had an outside basis of $30,000, which included his $12,000 share of Summit's debt. On January 1 of the current year, Daniel sells his partnership interest to Michael for a cash payment of $22,000 and the assumption of his share of Summit's debt. Summit has no hot assets. What is the amount and character of Daniel's recognized gain or loss on the sale?
At the end of last year, Daniel, a 25% partner in the Summit Consulting Partnership, had an outside basis of $30,000, which included his $12,000 share of Summit's debt. On January 1 of the current year, Daniel sells his partnership interest to Michael for a cash payment of $22,000 and the assumption of his share of Summit's debt. Summit has no hot assets. What is the amount and character of Daniel's recognized gain or loss on the sale?
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 47P
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What is the amount and character of recognized gain or loss on the sales of this financial accounting question?
Transcribed Image Text:At the end of last year, Daniel, a 25% partner in the Summit
Consulting Partnership, had an outside basis of $30,000, which
included his $12,000 share of Summit's debt.
On January 1 of the current year, Daniel sells his partnership
interest to Michael for a cash payment of $22,000 and the
assumption of his share of Summit's debt. Summit has no hot
assets.
What is the amount and character of Daniel's recognized gain or
loss on the sale?
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