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(Solved) 64. LO.15 BDD Partnership is a service-oriented partnership that has three equal gen- eral...


64.   LO.15 BDD Partnership is a service-oriented partnership that has three equal gen- eral partners. One of them, Barry, sells his interest to another partner,   Dale, for $90,000 of cash and the assumption of Barry’s share of partnership liabilities. Im- mediately before the sale, the partnership’s cash basis balance sheet is as shown   below. Assume that the capital accounts before the sale reflect the partners’ bases in their partnership interests, excluding liabilities. The payment exceeds the stated fair market value of the assets because of goodwill that is not recorded on the books.   Basis                             FMV                                                                                  Basis                           FMV Cash $120,000 $120,000 Note payable $  30,000 $  30,000 Accounts  receivable –0– 90,000 Capital accounts     Capital assets                                           30,000   75,000 Barry 40,000   85,000         David 40,000   85,000         Dale 40,000   85,000   Total                                                   $150,000   $285,000 Total $150,000   $285,000     a.     What is the total amount realized by Barry on the sale? b.     How much, if any, ordinary income must Barry recognize on the sale? c.     How much capital gain must Barry report? d.     What is Dale’s basis in the partnership interest  acquired?

 


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