Describe the income tax consequences to June

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Problem - At the end of last year, June, a 30% partner in the four-person BJJM Partnership, had an outside basis of $75,000 in the partnership, including a $60,000 share of partnership debt. June's share of the partnership's § 1245 recapture potential was $40,000. All parties use the calendar year. Describe the income tax consequences to June in both of the following independent situations that take place in the current year.

Required -

a. On the first day of the tax year, June sells her partnership interest to Marilyn for $120,000 cash and the assumption by Marilyn of the appropriate share of partnership liabilities.

b. June dies after a lengthy illness on April 1 of the current year. June's brother immediately takes June's place in the partnership.

Reference no: EM132648365

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