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:

Role Conflict

A situation where an individual faces competing demands or expectations from different roles they occupy, creating stress or difficulty in fulfilling these roles simultaneously.

Role Conflict

The tension caused by competing demands between two or more roles pertaining to different statuses.

Different Roles

Refers to the variety of functions or parts played by individuals in a societal, organizational, or relational context.

Emotion Management

Emotion management involves individuals' efforts to regulate and control their own emotional states or expressions in accordance with social norms or occupational expectations.