Question

Cindy sold her interest in a partnership for $20,000 cash when her outside basis was $5,000. She was relieved of her $25,000 share of partnership liabilities. What is Cindy's realized value from the sale of her partnership interest?

Answer 1

$40,000

Step-by-step explanation:

Cindy sold her interest in a partnership business for $20,000

Her outside basis is $5,000

She was relieved of $25,000 partnership shares

Therefore her realized value from the sale of her partnership interest can be calculated as follows

=>$20,000 + $25,000 - $5,000

=>$45,000 - $5,000

= $40,000

Hence her realised value is $40,000