MrAnd MsSmith's Partnership Owns the Following Assets * Potential § 1245 Recapture of $45,000

question 25

Multiple Choice

Mr.and Ms.Smith's partnership owns the following assets. $\begin{array}{lrr}&\text { Adjusted Basis Fair }&\text { Market Value }\\\text { Accounts receivable } & \$-0- & \$ 60,000 \\\text { Inventory } & 20,000 & 30,000 \\\text { Machinery and equipment* } & 50,000 & 90,000 \\\text { Buil dings** } & 120,000 & 170,000 \\\text { Land } & 80,000 & 140,000 \\& \$ 270,000 & \$ 490,000\end{array}$ * Potential § 1245 recapture of $45,000. ** Straight-line depreciation was used.
Mr) and Ms.Smith each have a basis for their partnership interest of $135,000.Calculate their combined recognized gain or loss and classify it as capital or ordinary if they sell their partnership interests for $500,000.

• A)$230,000 ordinary income.
• B)$230,000 capital gain.
• C)$115,000 ordinary income and $115,000 capital gain.
• D)$110,000 ordinary income and $120,000 capital gain.

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Definitions:

Job Redesign

The process of restructuring a job by altering its tasks and work environment to improve satisfaction and performance.

Jobs

Specific roles or positions within an organization or society that have assigned tasks and responsibilities.

Enriching

Adding value or improving the quality of something, often used in contexts involving personal growth, job content, or educational materials.

Job Demands

Aspects of a job that require sustained physical and mental effort, which can lead to strain when matched with inadequate resources.