Victor Is a 1/3 Partner in the VRX Partnership with an Outside

question 49

Essay

Victor is a 1/3 partner in the VRX partnership with an outside basis of $156,000 on January 1.Victor sells his partnership interest to Raj on January 1^st for $200,000 cash.The VRX Partnership has the following assets and no liabilities as of January 1:
The equipment was purchased for $360,000 and the partnership has taken $90,000 of depreciation.The stock was purchased 7 years ago.What is the amount and character of Victor's gain or loss on the sale of his partnership interest?

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Definitions:

Variable Cost

Costs that vary directly with the level of production or sales volume, such as materials and labor, in contrast to fixed costs which remain constant regardless of production level.

Transfer Price

The price charged for goods or services transferred between departments or subsidiaries within the same company.

Opportunity Cost

The price paid for not choosing the subsequent optimal alternative during decision-making.

Lost Contribution Margin

The profit forgone by not manufacturing or selling a product, represented by the contribution margin that would have been earned on each unit.