At the end of last year, Penélope, a 30% partner in the three-person JPM partnership, had an outside basis of $45,000, which included her $15,000 share of JPM's debt. On February 15 of the current year, Penélope sells her partnership interest to Thomas for a cash payment of $35,000 and the assumption of her share of JPM's debt. JPM has no hot assets. What is the amount and character of Penélope's recognized gain or loss on the sale? A. $4,000 capital loss B. $4,000 ordinary loss C. $5,000 capital gain D. $8,000 ordinary income
At the end of last year, Penélope, a 30% partner in the three-person JPM partnership, had an outside basis of $45,000, which included her $15,000 share of JPM's debt. On February 15 of the current year, Penélope sells her partnership interest to Thomas for a cash payment of $35,000 and the assumption of her share of JPM's debt. JPM has no hot assets. What is the amount and character of Penélope's recognized gain or loss on the sale? A. $4,000 capital loss B. $4,000 ordinary loss C. $5,000 capital gain D. $8,000 ordinary income
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 47P
Related questions
Question
4 POINTS
Transcribed Image Text:At the end of last year, Penélope, a 30% partner in the
three-person JPM partnership, had an outside basis of
$45,000, which included her $15,000 share of JPM's debt.
On February 15 of the current year, Penélope sells her
partnership interest to Thomas for a cash payment of
$35,000 and the assumption of her share of JPM's debt.
JPM has no hot assets. What is the amount and character
of Penélope's recognized gain or loss on the sale?
A. $4,000 capital loss
B. $4,000 ordinary loss
C. $5,000 capital gain
D. $8,000 ordinary income
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you