Question

Grace, James, Helen, and Charles each own equal interests in GJHC Partnership, a calendar-year-end, cash-method entity. On January 1 of the current year, James’s basis in his partnership interest is $73,750. For the taxable year, the partnership generates $80,400 of ordinary income and $36,000 of dividend income. For the first five months of the year, GJHC generates $25,750 of ordinary income and no dividend income. On June 1, James sells his partnership interest to Robert for a cash payment of $83,500. The partnership has the following assets and no liabilities at the sale date: (Do not round your intermediate calculations. Round your final calculation to the nearest whole dollar amount. Enter a loss as a negative number.)
Tax Basis FMV
Cash $ 38,500 $ 38,500
Land held for investment 83,500 108,200
Totals $ 122,000 $ 146,700


a.
Assuming GJHC’s operating agreement provides that the proration method will be used to allocate income or loss when p
artners’ interests change during the year, what is James’s basis in his partnership interest on June 1 just prior to the sale?

Answer 1

Answer

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Explanation  

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