Part B: Compute Jennie's recognized gain/loss from the sale of her parinership interest and the character of the gain/loss. TBSRCO0440 Sale of Partnership JJG Partnership, a calendar year, cash-method partnership has been in existence since Year 1. JJG's balance sheet as of June 30 , Year 4(06/30/Y4), is as follows: (3) You Answered Incorrectly. Part B Rationale: The $29,000 bosis was computed in Part A. The Account Receivable is a hot asset, $0$10,000 ot the gain from the sale is characterized as ordinary income due to the income potential in the recelvable ($30,000/3=$10,000), Jennie sells her partnership interest to Norm on June 30, Year 4, tor $50,000. On June 30, Year 4, Jennie's bosis in her partnership interest was $30,000. Jennie made no contributions and did not recelve any distributions from the partnership during Year 4 . The Similarly, if the collectibles were sold the gain allocated to Jennie would be $4,000(($32,000$20,000)/3 $4,000), so this gain is taxed at 28% as is gain from the sale of collectibles by an individual. partnershin's ondinary business incomloss for the year was ($6,000). There are no buildings that are being depreciated so there is no potential 25% gain. Part A: Assuming that Jennie is a calendar year taxpayer, and that all partnership items of income and loss are earned evenly throughout the year, compute Jennie's share of the partnership's ordinary business income or loss for Year 4. The residual gain is capital gain taxed at a maximum of 15% When will this incomerioss fow from the partnership to Jennie? You Answered Correctly! Part A Rationale: Since Jennie sold her partnership interest six months into the Year 4 tax year (and since all items are earned evenly throughout the year), 50% of one-third of the ordinary loss is allocated to Jennie. Theretore, Jennie's share of the ordinary loss is $1,000($6,0001/36 months/12 manths). When a partner selis his or her entire partnership interest, the partnership tax year closes with respect to that partner on the date of sale. Theref ore, the partnership tax year closes with respect to Jernie on June 30 , Year 4 , so Jennie's share of the ordinary loss (and all other partnership items) flows to her on June 30, Year 4. Jennie's basis for computing gain/loss on sale is $29,000($30,000$1,000). Part B: Compute Jennie's recognized gain/loss from the sale of her parinership interest and the character of the gain/loss. TBSRCO0440 Sale of Partnership JJG Partnership, a calendar year, cash-method partnership has been in existence since Year 1. JJG's balance sheet as of June 30 , Year 4(06/30/Y4), is as follows: (3) You Answered Incorrectly. Part B Rationale: The $29,000 bosis was computed in Part A. The Account Receivable is a hot asset, $0$10,000 ot the gain from the sale is characterized as ordinary income due to the income potential in the recelvable ($30,000/3=$10,000), Jennie sells her partnership interest to Norm on June 30, Year 4, tor $50,000. On June 30, Year 4, Jennie's bosis in her partnership interest was $30,000. Jennie made no contributions and did not recelve any distributions from the partnership during Year 4 . The Similarly, if the collectibles were sold the gain allocated to Jennie would be $4,000(($32,000$20,000)/3 $4,000), so this gain is taxed at 28% as is gain from the sale of collectibles by an individual. partnershin's ondinary business incomloss for the year was ($6,000). There are no buildings that are being depreciated so there is no potential 25% gain. Part A: Assuming that Jennie is a calendar year taxpayer, and that all partnership items of income and loss are earned evenly throughout the year, compute Jennie's share of the partnership's ordinary business income or loss for Year 4. The residual gain is capital gain taxed at a maximum of 15% When will this incomerioss fow from the partnership to Jennie? You Answered Correctly! Part A Rationale: Since Jennie sold her partnership interest six months into the Year 4 tax year (and since all items are earned evenly throughout the year), 50% of one-third of the ordinary loss is allocated to Jennie. Theretore, Jennie's share of the ordinary loss is $1,000($6,0001/36 months/12 manths). When a partner selis his or her entire partnership interest, the partnership tax year closes with respect to that partner on the date of sale. Theref ore, the partnership tax year closes with respect to Jernie on June 30 , Year 4 , so Jennie's share of the ordinary loss (and all other partnership items) flows to her on June 30, Year 4. Jennie's basis for computing gain/loss on sale is $29,000($30,000$1,000)
