Question

Calvin purchased a 40% partnership interest for $43,000 in February 2017. His share of partnership income in 2017 was $22,000, in 2018 was $25,000, and in 2019 was $12,000. He made no additional contributions to or withdrawals from the partnership. On December 18, 2019, Calvin sold his partnership interest for $103,000. What is his gain or loss on the sale of his partnership interest?

Answer 1

Calvin would have a long-term capital gain of $1000.

Step-by-step explanation:

Calvin's contributions towards partnership is as below

Beg $43,000

2010 income $22,000

2011 income $25,000

2010 income $12,000

Total contribution $102,000

Total amount Calvin realized by selling his partnership interest = $103,000.

Therefore, Calvin would have a long-term capital gain of $1000 (amount Calvin realized - Calvin's contributions = $103,000 - $102,000).