Serena Owns a 40% Interest in the RST LLP

question 31

Essay

Serena owns a 40% interest in the RST LLP. Partnership assets consist of land fair market value of $100,000, basis of $80,000), accounts receivable fair market value of $120,000, basis of $0), and cash of $180,000. Serena sells her interest in RST to Jaclyn for cash of $140,000. In addition, Jaclyn assumes Serena's $40,000 share of the LLP's liabilities. Serena's basis in the partnership interest including her share of the partnership's liabilities) is $120,000 immediately before the sale.
a. How much gain or loss does Serena recognize and what is its character?
b. What is Jaclyn's basis in the partnership interest?
c. If the LLP has a § 754 election in effect, how much is the adjustment and to which partners) is it allocated?

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Definitions:

Poisson Model

A statistical model used to predict the probability of a given number of events occurring within a fixed interval of time or space.

Probability

A measure of the likelihood of an event occurring, ranging from 0 (impossibility) to 1 (certainty).

Disease

A condition that impairs normal bodily functions, often characterized by specific symptoms and signs, and may be caused by factors such as pathogens, genetics, or environmental elements.

Poisson Distribution

A statistical distribution that expresses the probability of a given number of events occurring in a fixed interval of time or space.