On August 31 of the Current Tax Year, the Balance

question 13

Essay

On August 31 of the current tax year, the balance sheet of the RBD General Partnership reads as follows $$\begin{array} { l r r } & \text { Adjusted } \\& \text { Basis } & \text { FMV } \\\text { Cash } & \$ 150,000 & \$ 150,000 \\\text { Receivables } & -0- & 90,000 \\\text { Capital assets } & \underline{600,000} & \underline{660,000} \\\text { Total } & \$ 750,000 & \$ 900,000\\\\\text { Nonrecourse debt } & \$ 150,000 & \$ 150,000 \\\text { Rachel, capital } & 200,000 & 250,000 \\\text { Barry, capital } & 200,000 & 250,000 \\\text { Dale, capital } & \underline{200,000} & \underline{250,000} \\\text { Total } & \$ 750,000 & \$ 900,000\end{array}$$ On that date, Rachel sells her one-third partnership interest to Lisa for $300,000, consisting of cash and relief of
Rachel's share of the nonrecourse debt. The nonrecourse debt is shared equally among the partners. Rachel's
outside basis for her partnership interest is $250,000 including her share of partnership debt). How much capital gain and/or ordinary income will Rachel recognize on the sale?

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Definitions:

Persuasion

Persuasion is the act of convincing someone to change their beliefs, attitude, or behavior through argument, reasoning, or appeal to emotion.

Peripheral Route

A term from the Elaboration Likelihood Model of persuasion, referring to when a person is persuaded by something other than the argument or content of a message, such as attractiveness or celebrity endorsement.

Persuasive Argument

Communications designed to convince or influence an audience to accept a specific viewpoint or take a particular action.

Central Route

A method of persuasion that involves deeply processing the content of the message, leading to long-lasting attitude change.