Problem NO: 6

] Marco, Jaclyn, and Carrie formed Daxing Partnership (a calendar-year-end entity) by contributing cash 10 years ago. Each partner owns an equal inter

] Marco, Jaclyn, and Carrie formed Daxing 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, Marco sells his partnership interest to Ryan for a cash payment of $137,000. The partnership has the following assets and no liabilities as of the sale date:

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Tax Basis Fair Market Value

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Cash $ 18,000 $ 18,000

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Accounts receivable -0- 12,000

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Inventory 69,000 81,000

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Equipment 180,000 225,000

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Stock investment 45,000 75,000

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   Totals $ 312,000 $ 411,000

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

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a. What are the hot assets [§751(a)] for this sale?

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b. What is Marco’s gain or loss on the sale of his partnership interest?

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c. What is the character of Marco’s gain or loss?

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d. What are Ryan’s inside and outside bases in the partnership on the date of the sale?

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