Tony Sells His One-Fourth Interest in the WindyCity Partnership to Bill

question 77

Essay

Tony sells his one-fourth interest in the WindyCity Partnership to Bill for $100,000 cash when the partnership's assets are as follows:
The partnership has no liabilities on the sale date.Tony's basis in his partnership interest on the date of the sale is $60,000.What is the allocation of Tony's gain to the assets received?

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Definitions:

Identifiable Assets

Identifiable assets are company assets that can be separated from the entity, sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract.

Fair Value

The value likely to be obtained from disposing of an asset or the expense incurred in transferring a liability, within a structured exchange involving market entities at the time of assessment.

Goodwill

An intangible asset that arises when a buyer acquires an existing business, representing the premium paid over the fair value of the identifiable assets and liabilities.

Liabilities Assumed

Obligations that a company takes on as part of a transaction, such as purchasing another company or assets.