Problem NO: 7

Franklin, Jefferson, and Washington formed the Independence Partnership (a calendar-year-end entity) by contributing cash 10 years ago. Each partner o

Franklin, Jefferson, and Washington formed the Independence Partnership (a calendar-year-end entity) by contributing cash 10 years ago. Each partner owns an equal interest in the partnership and has an outside basis in their partnership interest of $104,000. On January 1 of the current year, Franklin sells their partnership interest to Adams for a cash payment of $122,000. The partnership has the following assets and no liabilities as of the sale date:

\r\n

Tax Basis Fair Market Value

\r\n

Cash $ 18,000 $ 18,000

\r\n

Accounts receivable -0- 12,000

\r\n

Inventory 69,000 81,000

\r\n

Equipment 180,000 225,000

\r\n

Stock investment 45,000 30,000

\r\n

   Totals $ 312,000 $ 366,000

\r\n

The equipment was purchased for $240,000, and the partnership has taken $60,000 of depreciation. The stock was purchased seven years ago.

\r\n

a. What is Franklin’s overall gain or loss on the sale of their partnership interest?

\r\n

b. What is the character of Franklin’s gain or loss?

\r\n

 

0  reviews

Suggestions based on the Question and Answer that you are currently viewing

The benefits of buying with AnswerDone:

Guaranteed quality through customer reviews

Access to High-Quality Documents

Our platform features a wide range of meticulously curated documents, from solved assignments and research papers to detailed study guides. Each document is reviewed to ensure it meets our high standards, giving you access to reliable and high-quality resources.

Quick and easy check-out

Easy and Secure Transactions

We prioritize your security. Our platform uses advanced encryption technology to protect your personal and financial information. Buying with AnswerDone means you can make transactions with confidence, knowing that your data is secure

Focus on what matters

Instant Access

Once you make a purchase, you’ll have immediate access to your documents. No waiting periods or delays—just instant delivery of the resources you need to succeed.

$1.49  0x  sold
    (0)
  Add to cart