At the end of last year, James, a 30% partner in the four-person XTR partnership, has an outside basis of $45,000, including his $18,000 share of XTR debt. On January 1 of the current year, James sells his partnership interest to Olivia for a cash payment of $30,000 and the assumption of his share of XTR's debt. XTR has no hot assets. What is the amount and character of James's recognized gain or loss on the sale! A. $3,000 capital loss B. $3,000 ordinary loss C. $3,000 capital gain D. $8,000 ordinary income
At the end of last year, James, a 30% partner in the four-person XTR partnership, has an outside basis of $45,000, including his $18,000 share of XTR debt. On January 1 of the current year, James sells his partnership interest to Olivia for a cash payment of $30,000 and the assumption of his share of XTR's debt. XTR has no hot assets. What is the amount and character of James's recognized gain or loss on the sale! A. $3,000 capital loss B. $3,000 ordinary loss C. $3,000 capital gain D. $8,000 ordinary income
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 47P
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At the end of last year, James, a 30% partner in the four- person... Please answer the accounting question
Transcribed Image Text:At the end of last year, James, a 30% partner in the four-person
XTR partnership, has an outside basis of $45,000, including his
$18,000 share of XTR debt. On January 1 of the current year,
James sells his partnership interest to Olivia for a cash payment of
$30,000 and the assumption of his share of XTR's debt. XTR has no
hot assets.
What is the amount and character of James's recognized gain or
loss on the sale!
A. $3,000 capital loss
B. $3,000 ordinary loss
C. $3,000 capital gain
D. $8,000 ordinary income
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