Question

Jerry is a 30 percent partner in the JJM Partnership when he sells his entire interest to Lucia for $82,750 cash. At the time of the sale, Jerry’s basis in JJM is $54,250. JJM does not have any debt or hot assets. What is Jerry’s gain or loss on the sale of his interest?

Answer 1

Answer:

Jerry's gain on the sale= $28,500

Explanation:

When Jerry sells his interest in JJM to Lucia his basis ($54,250) is what he owes and will be taken out of the proceeds he will get for selling his interest in the company.

Therefore

Jerry's gain on the sale= Amount of sale- Jerry's basis

Jerry's gain on the sale= 82,750- 54,250

Jerry's gain on the sale= $28,500