Question

Geena sold her interest in a partnership for $17,000 cash when her outside basis was $10,000. she was also relieved of her $35,000 share of partnership liabilities. what is geena's gain from the sale of the partnership interest?

O $7,000
O $17,000
O $42,000
O $52,000

Answer 1

Geena realized $52,000 from selling her partnership interest and being relieved of liabilities, which minus her $10,000 outside basis results in a gain of $42,000 from the sale.

Step-by-step explanation:

The student's question revolves around calculating the gain from the sale of a partnership interest, given certain monetary values for the sale, initial investment, and partnership liabilities. To calculate Geena's gain on the sale, we need to take into account the cash received and relief of liabilities as part of the total amount realized from the sale. Then we subtract Geena's outside basis in the partnership to find her gain.

Geena sold her partnership interest for $17,000 in cash and was relieved of her $35,000 share of partnership liabilities. Therefore, the total amount Geena realized from the sale is $17,000 (cash received) + $35,000 (liability relief) = $52,000. Geena's outside basis in the partnership was $10,000. To calculate the gain, we subtract her outside basis from the amount realized.

Total Gain = Amount Realized - Outside Basis
Total Gain = $52,000 - $10,000 = $42,000.

Thus, Geena's gain from the sale of the partnership interest is $42,000. This is the correct option in the final answer.