David Sells His One-Third Partnership Interest to Diana for $60,000

question 53

Essay

David sells his one-third partnership interest to Diana for $60,000 when his basis in the partnership interest is $48,000. On the date of sale, the partnership has no liabilities and the following assets:
$$\begin{array} { l l l } \text { Assets } & \text { Basis } &\text { \underline { F M V }} \\\text { Cash } & \$ 40,000 & \$ 40,006 \\\text { Inventory } & 18,070 & 27,090 \\\text { Building } & 75,000 & 102,000 \\\text { Land } & 11,000 & 11,000\end{array}$$ The building is depreciated on a straight-line basis. What tax issues should David and Diana consider with respect to the sale transaction?

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Definitions:

Insurance Contract

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