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.

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Definitions:

Dumping

The practice of exporting goods at a price lower than the home market price, often considered unfair competition.

Foreign Market

An external market outside the domestic borders where goods, services, and securities are traded or sold.

Cost of Production

The total expense incurred in manufacturing goods or providing services, including raw materials, labor, and overhead costs.

Trade Barriers

Measures that governments or public authorities introduce to make imported goods or services less competitive than locally produced goods and services.