Question
Burlington Enterprises LLC is treated as a partnership for purposes of the federal income tax. It has the following assets and liabilities: Basis FMV Cash
Burlington Enterprises LLC is treated as a partnership for purposes of the federal income tax. It has the following assets and liabilities:
|
| Basis | FMV |
| Cash | $39,000 | $39,000 |
| Land | 50,000 | 200,000 |
| Other capital assets | 100,000 | 190,000 |
| Totals | $189,000 | $429,000 |
|
|
|
|
| Recourse liabilities | $84,000 | $84,000 |
| Capital, B | 35,000 | 115,000 |
| Capital, L | 35,000 | 115,000 |
| Capital, T | 35,000 | 115,000 |
| Totals | $189,000 | $429,000 |
The three partners share equally in profits, losses and capital. Each partner also has a 1/3 share of liabilities. T is considering the sale of her one-third interest in the partnership for $115,000 cash. The buyer is unrelated to either T or the partnership.
What will be the amount realized (i.e., selling price) by T on the sale to the unrelated buyer?
What is Ts basis in the partnership interest at the date of sale?
How much gain or loss will T recognize on the sale?
What will be the buyers tax basis in the newly acquired interest in Burlington Enterprises?
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