Tina Goldsmith sells her 25% partnership interest to George Holden for $50,000. At the time of the sale, the partnership had the following assets (listed at fair market value and inside basis): Item Fair Value Inside Basis Cash 100,000 100,000 Inventory 60,000 52,000 Securities 40,000 28,000 Total 200,000 180,000 The partnership has no liabilities. Tina's outside basis at the time of sale is $45,000. Which of the following statements is FALSE? Tina has an overall gain of $5,000 on the sale. Tina has a capital gain of $5,000 on the sale. Tina has a capital gain of $3,000 and an ordinary gain of $2,000 on the sale. If the partnership has an election in place, the partnership may increase the inside basis of partnership assets for the benefit of new partner George to reflect the gain recognize by Tina during George's purchase.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
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