Lonnie Davis has been a general partner in the Highland Partnership for many years and is also a sole proprietor in a separate business. To spend more time focusing on his sole proprietorship, he plans to leave Highland and will receive a liquidating distribution of $66,500 in cash and land with a fair market value of $132,500 (tax basis of $176,000). Immediately before the distribution, Lonnie’s basis in his partnership interest is $392,000, which includes his $85,500 share of partnership debt. The Highland Partnership does not hold any hot assets. What is the amount and character of Lonnie’s gain or loss if he places the land into service in his sole proprietorship and then sells it 13 months later for $165,000?
Lonnie Davis has been a general partner in the Highland Partnership for many years and is also a sole proprietor in a separate business. To spend more time focusing on his sole proprietorship, he plans to leave Highland and will receive a liquidating distribution of $66,500 in cash and land with a fair market value of $132,500 (tax basis of $176,000). Immediately before the distribution, Lonnie’s basis in his partnership interest is $392,000, which includes his $85,500 share of partnership debt. The Highland Partnership does not hold any hot assets. What is the amount and character of Lonnie’s gain or loss if he places the land into service in his sole proprietorship and then sells it 13 months later for $165,000?
Chapter21: Partnerships
Section: Chapter Questions
Problem 25CE
Related questions
Question
100%
Lonnie Davis has been a general partner in the Highland Partnership for many years and is also a sole proprietor in a separate business. To spend more time focusing on his sole proprietorship, he plans to leave Highland and will receive a liquidating distribution of $66,500 in cash and land with a fair market value of $132,500 (tax basis of $176,000). Immediately before the distribution, Lonnie’s basis in his partnership interest is $392,000, which includes his $85,500 share of partnership debt. The Highland Partnership does not hold any hot assets.
What is the amount and character of Lonnie’s gain or loss if he places the land into service in his sole proprietorship and then sells it 13 months later for $165,000?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you