Lars Has a Basis in His Partnership Interest in XXL

question 2140

Multiple Choice

Lars has a basis in his partnership interest in XXL of $100,000. He sells the partnership interest in XXL for $160,000. XXL is a cash- basis partnership which has accounts receivable with a $30,000 fair market value and a zero adjusted basis. Lars's share of these receivables is $10,000. What is the amount and character of the gain that Lars recognizes on the sale of his partnership interest?

• A) $10,000 ordinary income and $50,000 capital gain
• B) $10,000 ordinary income and $60,000 capital gain
• C) $60,000 capital gain
• D) $50,000 capital gain

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