Question

jerry is a 20 percent partner in the jjm partnership when he sells his entire interest to lucia for $94,000 cash. at the time of the sale, jerry's basis in jjm is $51,000. jjm does not have any debt or hot assets. what is jerry's gain or loss on the sale of his interest?

Answer 1

Jerry has realized a gain of $43,000 from the sale of his partnership interest to Lucia, calculated by subtracting his basis of $51,000 from the selling price of $94,000.

Step-by-step explanation:

When Jerry sells his partnership interest in JJM to Lucia for $94,000 and his original basis in the partnership is $51,000, we need to calculate Jerry's gain or loss from the transaction. The gain or loss is determined by subtracting the basis from the selling price. Therefore, Jerry's gain would be:

Gain = Selling Price - Basis

Gain = $94,000 - $51,000 = $43,000

Jerry has realized a gain of $43,000 from the sale of his partnership interest, as he sold it for more than his basis. Since the partnership does not have any debt or hot assets, there are no additional complexities in this calculation.