Reference no: EM133039886
Question 1 - Gabby is a 1/3 partner (capital and profits) in GAB Partnership (cash basis, calendar year partnership). At the beginning of the year, Gabby's outside basis is $100,000. Since the beginning of the year, GAB has had ordinary business income of $60,000. The partnership currently has the following assets:
Cash: $300,000
Unrealized receivables: FMV = $90,000 ($0 inside basis)
Land: FMV = $90,000; $60,000 inside basis (purchased by GAB Partnership)
1. If Gabby sells her 1/3 partnership interest to George for $160,000, what is the amount of Gabby's gain or loss recognized? Enter gain as a positive number or loss as a negative number. Do not include in your answer the ordinary income that will be allocated to Gabby from the $60,000 ordinary business income, but make sure to adjust Gabby's basis before determining her gain/loss recognized.
2. Gabby sold her 1/3 partnership interest to George for $160,000. What amount of the gain on the sale is capital gain?
Question 2 - Pablo has a $130,000 outside basis in his partnership interest (cash-basis partnership). This year, the partnership distributed the following to Pablo in a proportionate current distribution (land was purchased by the partnership):
Cash: $25,000
Unrealized receivables: FMV = $16,000; inside basis = $0
Land: FMV = $90,000; inside basis = $80,000
1. After the distribution, what is Pablo's basis in the land?
2. After the distribution, what is Pablo's basis in his partnership interest?
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