Question:68 At the end of last year, Cindy, a 20% partner in the five-person CBT partnership, has an outside basis of $25,000 including her $10,500 share of CBT debt. On January 1 of the current year, Cindy sells her partnership interest to Raymond for a cash payment of $18,000 and the assumption of her share of CBT's debt. CBT has no hot assets. What is the amount and character of Cindy's recognized gain or loss on the sale? A. $7,000 capital loss. B. $7,000 ordinary loss. C. $3,500 capital gain. D. $7,500 ordinary income.
Question:68 At the end of last year, Cindy, a 20% partner in the five-person CBT partnership, has an outside basis of $25,000 including her $10,500 share of CBT debt. On January 1 of the current year, Cindy sells her partnership interest to Raymond for a cash payment of $18,000 and the assumption of her share of CBT's debt. CBT has no hot assets. What is the amount and character of Cindy's recognized gain or loss on the sale? A. $7,000 capital loss. B. $7,000 ordinary loss. C. $3,500 capital gain. D. $7,500 ordinary income.
Chapter13: Choice Of Business Entity—general Tax And Nontax Factors/formation
Section: Chapter Questions
Problem 51P
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Transcribed Image Text:Question:68
At the end of last year, Cindy, a 20% partner in the five-person CBT
partnership, has an outside basis of $25,000 including her $10,500
share of CBT debt. On January 1 of the current year, Cindy sells her
partnership interest to Raymond for a cash payment of $18,000 and the
assumption of her share of CBT's debt. CBT has no hot assets.
What is the amount and character of Cindy's recognized gain or loss on
the sale?
A. $7,000 capital loss.
B. $7,000 ordinary loss.
C. $3,500 capital gain.
D. $7,500 ordinary income.
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