Required information [The following information applies to the questions displayed below.] Franklin, Jefferson, and Washington formed the Independence Partnership (a calendar-year-end entity) by contributing cash 10 years ago. Each partner owns an equal interest in the partnership and has an outside basis in their partnership interest of $104,000. On January 1 of the current year, Franklin sells their partnership interest to Adams for a cash payment of $122,000. The partnership has the following assets and no liabilities as of the sale date: Cash Accounts receivable Tax Basis FMV $ 18,000 0 $ 18,000 12,000 Inventory Equipment Stock investment Totals 69,000 180,000 45,000 81,000 225,000 30,000 $ 312,000 $ 366,000 The equipment was purchased for $240,000, and the partnership has taken $60,000 of depreciation. The stock was purchased seven years ago.
Franklin, Jefferson, and Washington formed the Independence
a. What is Franklin's overall gain or loss on the sale of their partnership interest?
b. What is the character of Franklin's gain or loss?
![Required information
[The following information applies to the questions displayed below.]
Franklin, Jefferson, and Washington formed the Independence Partnership (a calendar-year-end entity) by contributing
cash 10 years ago. Each partner owns an equal interest in the partnership and has an outside basis in their partnership
interest of $104,000. On January 1 of the current year, Franklin sells their partnership interest to Adams for a cash payment
of $122,000. The partnership has the following assets and no liabilities as of the sale date:
Cash
Accounts receivable
Tax Basis
FMV
$ 18,000
0
$ 18,000
12,000
Inventory
Equipment
Stock investment
Totals
69,000
180,000
45,000
81,000
225,000
30,000
$ 312,000
$ 366,000
The equipment was purchased for $240,000, and the partnership has taken $60,000 of depreciation. The stock was
purchased seven years ago.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd8ba6e31-46ab-41b7-a037-c8768fa417b1%2F1b25808b-e23c-4ee5-a3c3-67f8fc31af06%2F6k58dr_processed.png&w=3840&q=75)
Step by step
Solved in 2 steps
