Question linda pays 100000 cash for jerrys frac14 interests

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Reference no: EM13348885

Question :

Linda pays $100,000 cash for Jerry's ¼ interests in the JILL Partnership. The partnership has a Sec. 754 election effect. Just by the sale of Jerry's interest, JILL's balance sheet appears as given:

Partnership's Basis FMV Assets:

Cash $75,000 $75,000

Land $225,000 $325,000

Total $300,000 $400,000

Partners' capital

Jerry $75,000 $100,000

Instrument Corp $75,000 $100,000

Logo Corp $75,000 $100,000

Lighthouse Corp $75,000 $100,000

Total $300,000 $400,000

a. Determine Linda's total optional basis adjustment?

b. If JILL Partnership sells the land for its $325,000 FMV instantly after Linda purchases her interest, how much profit or loss will the partnership recognize?

c. How much profit will Linda report as a result of the sale?

Reference no: EM13348885

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