Travis and Alix Weber are equal partners in the Tralix Partnership, which does not have a §754 election in place. Alix sells one-half of her interest (25 percent) to Michael Tomei for $41,500 cash. Just before the sale, Alix’s basis in her entire partnership interest is $88,800, including her $41,500 share of the partnership liabilities. Tralix’s assets on the sale date are as follows: Tax Basis FMVCash$50,350 $50,350Inventory 41,500 136,000Land held for investment 85,750 54,600Totals$177,600 $240,950 a. What is the amount and character of Alix’s recognized gain or loss on the sale?multiple choice$23,625 of ordinary income and $5,775 of capital loss$5,775 of capital loss, $5,775 of ordinary income$5,775 of ordinary income and $23,625 of capital loss$35,700 of capital loss, $11,813 of ordinary incomeNeither gain nor loss recognized

Out of Recognized gain or loss share of change in inventory is treated as ordinary income

Answered: Travis and Alix Weber are equal…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Travis and Alix Weber are equal partners in the Tralix Partnership, which does not have a §754 election in place. Alix sells one-half of her interest (25 percent) to Michael Tomei for $41,500 cash. Just before the sale, Alix’s basis in her entire partnership interest is $88,800, including her $41,500 share of the partnership liabilities. Tralix’s assets on the sale date are as follows:

		Tax Basis	FMV
Cash	$	50,350	$	50,350
Inventory		41,500		136,000
Land held for investment		85,750		54,600
Totals	$	177,600	$	240,950

a. What is the amount and character of Alix’s recognized gain or loss on the sale?

multiple choice

$23,625 of ordinary income and $5,775 of capital loss
$5,775 of capital loss, $5,775 of ordinary income
$5,775 of ordinary income and $23,625 of capital loss
$35,700 of capital loss, $11,813 of ordinary income
Neither gain nor loss recognized

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