Nick Sells His 25% Interest in the LMNO Partnership to New

question 123

True/False

Nick sells his 25% interest in the LMNO Partnership to new partner Nancy for $50,000.The partnership's assets consist of cash ($100,000),land (basis of $60,000;fair market value of $40,000),and inventory (basis of $50,000;fair market value of $60,000).Nick's basis in his partnership interest was $52,500.On the sale,Nick will recognize ordinary income of $2,500 and a capital loss of $5,000.

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Definitions:

Borrowed

The state of having taken something on loan, often with the obligation to return it or repay an equivalent amount.

Annual Rate

The interest rate for a whole year, as opposed to just a monthly or daily rate.

Days

A unit of time equivalent to 24 hours, often used to measure durations or intervals.

Grow

To grow or expand in size, volume, or intensity as time progresses.