Question

At the end of last year, Cynthia, a 20 percent partner in the five-person CYG partnership, has an outside basis of $36,000, including her $24,000 share of CYG debt. On January 1 of the current year, Cynthia sells her partnership interest to Roger for a cash payment of $25,500 and the assumption of her share of CYG's debt. CYG has no hot assets. What is the amount and character of Cynthia's recognized gain or loss on the sale

Answer 1

Capital gain $13,500

Step-by-step explanation:

Calculation for the amount and character of Cynthia's recognized gain or loss on the sale

Using this formula

Capital gain/loss=Cash payment+Share of CYG debt-Outside basis

Let plug in the formula

Capital gain/loss=$25,500 + $24,000 - $36,000

Capital gain= $13,500

Therefore the amount and character of Cynthia's recognized gain or loss on the sale will be $13,500