The SSC, a Cash-Method Partnership, Has a Balance Sheetthat Includes

question 61

Multiple Choice

The SSC, a cash-method partnership, has a balance sheetthat 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 $120,000 cash, how much capital gain and ordinary income must Susan recognize from the sale?

• A) $30,000 ordinary income.
• B) $30,000 capital gain.
• C) $10,000 ordinary income; $20,000 capital gain.
• D) $10,000 capital gain; $20,000 ordinary income.

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Definitions:

Continuity

The concept that certain properties remain constant over time, despite changes in the container or appearance.

Linear Perspective

Monocular depth perception cue; the tendency for parallel lines to appear to converge on each other.

Motion Parallax

Monocular depth perception cue; the perception of motion of objects in which close objects appear to move more quickly than objects that are farther away.

Reversible

Describing a process or condition that can be returned to its original state or form without permanent damage.