At the Beginning of Year 1, Paulina Purchased a 25

question 83

Multiple Choice

At the beginning of year 1, Paulina purchased a 25% general partner interest in Gamma Partnership for $25,000. Paulina's partnership Schedule K-1 for year 1 reported that her share of Gamma's debt at year-end was $10,000 and her share of ordinary loss was $5,000. On January 1, year 2, Paulina sold her interest to another partner for $22,000 cash. Compute Paulina's gain or loss on the sale of her partnership interest.

• A) $3,000 loss
• B) $8,000 loss
• C) $2,000 gain
• D) $0 gain or loss