Jackson Is a 30% Partner in the JJM Partnership When

question 32

Multiple Choice

Jackson is a 30% partner in the JJM Partnership when he sells his entire interest to Rhonda for $112,000 cash. At the time of the sale, Jackson's basis in JJM is $64,000. JJM does not have any debt or hot assets. What is Jackson's gain or loss on the sale of his interest?

• A) $48,000 capital gain.
• B) $48,000 ordinary income.
• C) $24,000 capital gain and $24,000 ordinary income.
• D) Gain or loss cannot be determined.

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Definitions:

Ambrosia

In the context of mythology, it's the food of the gods, often associated with immortality; in culinary terms, it denotes a sweet fruit salad.

Bubble Gum

A type of chewing gum designed to be inflated out of the mouth as a bubble.

Income

Money received, especially on a regular basis, for work or through investments.

Blue Currency

Informal term possibly referring to a foreign currency held in accounts outside the country of origin, often in a stronger, more stable currency.