Mark, a 25% partner in the four-person MNP partnership, has an outside basis of $45,000 including his $15,000 share of MNP debt at the end of last year. On March 1 of the current year, Mark sells his partnership interest to Sarah for a cash payment of $35,000 and the assumption of his share of MNP's debt. MNP has no hot assets. What is the amount and character of Mark's recognized gain or loss on the sale? A. $10,000 ordinary loss B. $5,000 capital gain C. $5,000 ordinary income D. $10,000 capital loss
Mark, a 25% partner in the four-person MNP partnership, has an outside basis of $45,000 including his $15,000 share of MNP debt at the end of last year. On March 1 of the current year, Mark sells his partnership interest to Sarah for a cash payment of $35,000 and the assumption of his share of MNP's debt. MNP has no hot assets. What is the amount and character of Mark's recognized gain or loss on the sale? A. $10,000 ordinary loss B. $5,000 capital gain C. $5,000 ordinary income D. $10,000 capital loss
Chapter11: Partnerships: Distributions, Transfer Of Interests, And Terminations
Section: Chapter Questions
Problem 48P
Related questions
Question
Don't use ai given answer accounting questions
Transcribed Image Text:Mark, a 25% partner in the four-person MNP partnership, has an outside basis
of $45,000 including his $15,000 share of MNP debt at the end of last year. On
March 1 of the current year, Mark sells his partnership interest to Sarah for a
cash payment of $35,000 and the assumption of his share of MNP's debt. MNP
has no hot assets. What is the amount and character of Mark's recognized gain
or loss on the sale?
A. $10,000 ordinary loss
B. $5,000 capital gain
C. $5,000 ordinary income
D. $10,000 capital loss
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