Barney,Bob,and Billie Are Equal Partners in the BBB Partnership

question 23

Multiple Choice

Barney,Bob,and Billie are equal partners in the BBB Partnership.The partnership balance sheet reads as follows on December 31 of the current year:

Partner Billie has an adjusted basis of $40,000 for her partnership interest.If Billie sells her entire partnership interest to new partner Janet for $60,000 cash,how much capital gain and ordinary income must Billie recognize from the sale?

• A)$20,000 ordinary income.
• B)$20,000 capital gain.
• C)$10,000 ordinary income; $10,000 capital gain.
• D)$30,000 ordinary income; $10,000 capital loss.
• E)None of the above.

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