Steve Sells His 20% Partnership Interest Having a $28,000 Basis

question 59

Multiple Choice

Steve sells his 20% partnership interest having a $28,000 basis to Nancy for $40,000 cash.At the time of the sale,the partnership has no liabilities and its assets are as follows: The receivables and inventory are Sec.751 assets.There is no agreement concerning the allocation of the sales price.Steve must recognize

• A)no gain or loss.
• B)$12,000 ordinary income.
• C)$12,000 capital gain.
• D)$14,000 ordinary income and $2,000 capital loss.

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Definitions:

Pain

An unpleasant sensory and emotional experience associated with actual or potential tissue damage, or described in terms of such damage.

Recovery

The process of returning to a normal state of health, mind, or strength after experiencing damage or illness.

Exercise

Physical activities undertaken to maintain or enhance health and fitness, including aerobic, strength, flexibility, and balance exercises.

Stress

The body's reaction to any change that requires an adjustment or response, which can be physical, mental, or emotional.