The SSC,a Cash-Method Partnership,has a Balance Sheet That Includes the Following

question 10

Multiple Choice

The SSC,a cash-method partnership,has a balance sheet that includes the following assets on December 31 of the current year: Susan,a one-third partner,has an adjusted basis of $90,000 for her partnership interest.If Susan sells her entire partnership interest to Emma for $100,000 cash,what is the amount and character of Susan's gain or loss from the sale?

• A)$10,000 capital gain.
• B)$10,000 ordinary income.
• C)$20,000 ordinary income; $10,000 capital gain.
• D)$10,000 capital loss; $20,000 ordinary income.

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Definitions:

Indirect Pay

Compensation that is not paid directly as cash but includes benefits like health insurance, retirement plans, and paid time off.

Health Care Spending Accounts

Accounts that allow employees to set aside pre-tax dollars to pay for eligible health care expenses not covered by their insurance.

Fixed Benefits Plan

A type of employee benefits plan where the benefits provided are predetermined and not based on individual performance or company profitability.

Defined Benefit Plan

A pension plan that guarantees a specified monthly benefit at retirement, which is predetermined by a formula based on the employee's earnings history, tenure of service, and age.