Question

Joy is a 30 percent partner in the JOM Partnership when she sells her entire interest to Hope for $72,000 cash. At the time of the sale, Joy’s basis in JOM is $44,000 (which includes her $6,000 share of JOM liabilities). JOM does not have any hot assets. What is Joy’s gain or loss on the sale of her interest?

Answer 1

Answer: $34,000

Explanation: The gain or loss of joy on the sale can be computed using following equation :-

Gain or loss = Amount realized on sale + relief on debt - JOM basis

now, putting the values into equation above we get :-

Gain or loss = $72,000 + $6,000 - $44,000

Gain or loss = $34,000 gain