Mr and Ms Smith's Partnership Owns the Following Assets: * Potential

question 69

Multiple Choice

Mr. and Ms. Smith's partnership owns the following assets: * Potential § 1245 recapture of $45,000.
** Straight-line depreciation was used.
Mr) and Ms. Smith each have a basis for their partnership interest of $135,000. Calculate their combined recognized gain or loss and classify it as capital or ordinary if they sell their partnership interests for $500,000.

• A) $230,000 ordinary income.
• B) $230,000 capital gain.
• C) $115,000 ordinary income and $115,000 capital gain.
• D) $110,000 ordinary income and $120,000 capital gain.
• E) None of the above.

---

Definitions:

Developing Country

A nation with a lower living standard, underdeveloped industrial base, and low Human Development Index relative to other countries.

Capital Imports

The purchase and importation of foreign capital goods and services, reflecting a country's investment in assets that promote economic growth.

Foreign Aid

Financial or non-financial assistance given from one country to another, often to support development or alleviate poverty.

Purchasing Power

The real value of money in terms of the quantity of goods or services that one unit of money can buy.