Business, 25.04.2020 00:34 Jsusussueususu

Franklin, Jefferson, and Washington formed the Independence Partnership (a calendar year-end entity) by contributing cash 10 years ago. Each partner owns an equal interest in the partnership and has an outside basis in his partnership interest of $104,000. On January 1 of the current year, Franklin sells his partnership interest to Adams for a cash payment of $122,000.
The partnership has the following assets and no liabilities as of the sale date:

Basis Fair Market Value
Cash $ 18,000 $ 18,000
Accounts receivable -0- 12,000
Inventory 69,000 81,000
Equipment 180,000 225,000
Stock investment 45,000 30,000
Totals $ 312,000 $ 366,000

The equipment was purchased for $240,000 and the partnership has taken $60,000 of depreciation. The stock was purchased 7 years ago.
Required:
a. What is Franklin’s overall gain or loss on the sale of his partnership interest?
b. What is the character of Franklin’s gain or loss?

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Franklin, Jefferson, and Washington formed the Independence Partnership (a calendar year-end entity)...

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