Question

On April 1, George Hart, Jr. acquired a 25 percent interest in the Wilson, Hart, and Company partnership by gift from his father. The 25 percent partnership interest had been acquired by a $50,000 cash investment by Hart, Sr. 10 years ago. The fair market value of Hart, Sr.'s partnership interest was $60,000 at the time of the gift. Hart, Jr. sold the 25 percent interest for $85,000 on December 17. What type and amount of capital gain should Hart, Jr. report on his tax return

Answer 1

Answer:

long-term capital gain of $25,000.

Explanation:

Based on the information given the type and amount of capital gain Hart, Jr. Should report on his tax return is A LONG-TERM CAPITAL GAIN OF the amount of $25,000. Calculated as:

Long-term capital gain=Interest sold-Partnership interest fair market value

Let plug in the formula

Long-term capital gain=$85,000-$60,000

Long-term capital gain=$25,000

Therefore Hart, Jr. Should report on his tax return is A LONG-TERM CAPITAL GAIN OF $25,000