Jeremy Is an Active Partner Who Owns a 30% Interest

question 102

Essay

Jeremy is an active partner who owns a 30% interest in the JS LLP (in which capital is not a material income-producing factor). Partnership assets consist of land (fair market value of $200,000, basis of $140,000), accounts receivable (fair market value of $200,000, basis of $0), and cash of $400,000. JS distributes $220,000 of the cash to Jeremy in liquidation of his interest. In addition, Jeremy is relieved of his $40,000 share of the LLP's liabilities. The total payment includes $20,000 for Jeremy's share of JS goodwill (for which the agreement does not provide). Jeremy's basis in the partnership interest (including his share of the partnership's liabilities) is $120,000 immediately before the distribution. How much gain or loss does Jeremy recognize and what is its character? How much can the partnership deduct?

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Definitions:

Neonates

Newborn babies, especially those in the first 28 days of life outside the womb.

Different Tastes

Varied preferences and likes that people have, especially in the context of food, art, culture, etc.

Sleeping Patterns

The habitual timing, duration, and quality of sleep, which can influence overall health and well-being.

Stages Of Childbirth

The three phases during labor and delivery, starting from contractions, through delivery of the baby, to the delivery of the placenta.