At the End of Last Year, Cynthia, a 20% Partner

question 34

Multiple Choice

At the end of last year, Cynthia, a 20% partner in the five-person CYG partnership, has an outside basis of $30,000 including her $15,000 share of CYG debt. On January 1 of the current year, Cynthia sells her partnership interest to Roger for a cash payment of $22,500 and the assumption of her share of CYG's debt. CYG has no hot assets. What is the amount and character of Cynthia's recognized gain or loss on the sale?

• A) $7,500 capital loss.
• B) $7,500 ordinary loss.
• C) $7,500 capital gain.
• D) $7,500 ordinary income.

Comprehend the purpose and components of the major financial statements, including the balance sheet, income statement, statement of cash flows, and statement of changes in equity.

Calculate owner's equity based on assets and liabilities.

Grasp the concept of net income, net loss, and how they are determined.

Understand the role of transactions in affecting a company's financial status.

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Definitions:

Equality

The state of being equal in status, rights, or opportunities; an ideal of ensuring fairness and justice among individuals or groups.

Linking People

The process of connecting individuals or groups for the purpose of communication, collaboration, or community building.

Goods And Services

The output of economic activities that satisfy human wants; goods are tangible products, while services are intangible activities or benefits.

Advanced Industrial Society

A term used to describe societies that are characterized by high levels of industrialization, technological advancement, and economic productivity.