Assume the same facts as in problem 52, except that rather than sell his partnership interest to
Question:
Assume the same facts as in problem 52, except that rather than sell his partnership interest to Susan, Woody receives a $47,000 cash distribution from the partnership in complete liquidation of his interest. How would the tax consequences for Woody differ from those associated with the sale to Susan?
Problem 52
Woody is a one-third partner in Boyd Partners. His basis in his partnership interest is $28,000, consisting of his $15,000 capital interest and his $13,000 (one-third) share of partnership liabilities. He is considering selling his interest to Susan. Susan would pay Woody $47,000 cash and step into his shoes as a partner. The partnership has no hot assets.
a. How much gain must Woody recognize on the sale, and what will be its character?
b. What will be Susan’s tax basis in the newly acquired partnership interest?
Step by Step Answer:
CCH Federal Taxation Basic Principles 2020
ISBN: 9780808051787
2020 Edition
Authors: Ephraim P. Smith, Philip J. Harmelink, James R. Hasselback