Question
On January 1, 2020, Johnathan sold his 25% partnership interest in Jazz Partnership, to Robert for $120,000 plus the assumption of his share of Jazz
On January 1, 2020, Johnathan sold his 25% partnership interest in Jazz Partnership, to Robert for $120,000 plus the assumption of his share of Jazz Partnership liabilities. Before selling his interest, Johnathan had an outside basis in his Jazz Partnership interest of $80,000, which includes his $20,000 share of Jazz Partnership liabilities. Jazz Partnership had the following asset and liabilities at the date of sale:
|
| Tax Basis | FMV |
| Cash | 150,000 | 150,000 |
| Accounts Receivable | 40,000 | 52,000 |
| Inventory | 50,000 | 70,000 |
| Land | 20,000 | 288,000 |
|
|
|
|
| Liabilities | 80,000 |
|
- What is the amount and character of any gain or loss recognized by Johnathan on the sale of his partnership interest?
- What basis does Robert take in his newly acquired partnership interest in Jazz Partnership?
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Financial Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
6th Canadian edition
1118644948, 978-1118805084, 1118805089, 978-1118644942
