Joan Is a 30% Partner in the OJT Partnership When

question 4

Essay

Joan is a 30% partner in the OJT Partnership when she sells her entire interest to Crissy for $100,000 cash. At the time of the sale, Joan's basis in OJT is $63,000 (which includes her $10,000 share of OJT liabilities). OJT does not have any hot assets. What is the amount and character of Joan's gain or loss on the sale?

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Definitions:

Quick Assets

Liquid assets that can be rapidly converted into cash without significantly affecting their value, including cash, marketable securities, and receivables.

Current Receivables

Financial assets expected to be converted into cash within one year, including money owed by customers (accounts receivable).