At the end of last year, Lisa, a 35 percent partner in the five-person LAMEC Partnership, has an outside basis of $60,000, including her $30,000 share of LAMEC debt. On January 1 of the current year, Lisa sells her partnership interest to MaryLynn for a cash payment of $45,000 and the assumption of her share of LAMEC's debt.

1.

value: 1.00 points

Required information

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

	$10,700 of ordinary income and $3,000 of capital gain
	$14,000 of capital loss
	$15,000 of capital gain
	$2,500 of ordinary income and $12,000 of capital gain
	$35,000 of ordinary income and $20,000 of capital loss
	None of the above

References

eBook & Resources

Multiple ChoiceDifficulty: 2 MediumLearning Objective: 21-01 Determine the tax consequences to the buyer and seller of the disposition of a partnership interest, including the amount and character of gain or loss recognized.

Check my work

2.

value: 1.00 points

Required information

b. If LAMEC has $100,000 of unrealized receivables as of the sale date, what is the amount and character of Lisas recognized gain or loss?

	$15,000 capital gain
	$15,000 ordinary income
	$7,500 ordinary income and $7,500 capital gain
	$35,000 ordinary income and $20,000 capital loss
	$35,000 ordinary income and $3,000 capital loss

References

eBook & Resources

Multiple ChoicesDifficulty: 2 MediumLearning Objective: 21-01 Determine the tax consequences to the buyer and seller of the disposition of a partnership interest, including the amount and character of gain or loss recognized.

Check my work

3.

value: 1.00 points

Required information

c. What is MaryLynns initial basis in the partnership interest?