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

question 90

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:
Assets Basis FMV
Cash $40,000 $40,000
Inventory 18,000 27,000
Building 75,000 102,000
Land 11,000 11,000
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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