The SSC Partnership Balance Sheet Includes the Following Assets on December

question 5

Multiple Choice

The SSC Partnership balance sheet includes the following assets on December 31 of the current year: $$\begin{array} { | l | r | r | } \hline & \text { Basis } & \underline { \text { FMV } } \\\hline \text { Cash } & \$ 180,000 & \$ 180,000 \\\hline \text { Accounts receivable } & - 0 - & 60,000 \\\hline \text { Land } & 90,000 & 120,000 \\\hline \text { Total } & \underline { \$ 270,000 } & \underline { \$ 360,000 } \\\hline\end{array}$$ Susan, a 1/3 partner, has an adjusted basis of $90,000 for her partnership interest. If Susan sells her entire partnership interest to Emma for $120,000 cash, how much capital gain and ordinary income must Susan recognize from the sale?

• A) $30,000 ordinary income
• B) $30,000 capital gain
• C) $10,000 ordinary income; $20,000 capital gain
• D) $10,000 capital gain; $20,000 ordinary income

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