Tara is a calendar year, accrual method general partnership in which each partner has a one-third interest in capital, profits, and losses. There are no Section 704(c) assets in the partnership (all partners contributed cash, rather than property, when the partnership was formed). One of the partners, Rhett Butler, sells his partnership interest to Ashley Wilkes for $380,000 in cash. Immediately prior to the sale, the balance sheet of the partnership was as follows: Tax Basis Fair Market Value Assets: Cash 300,000 300,000 Accounts Receivable 150,000 150,000 Inventory (Cotton and Smelling Salts) 30,000 60,000 Twelve Oaks Estate (Investment Land) 210,000 318,000 Aunt Pittypat Building (no recapture potential) 210,000 492,000 Total 900,000 1,320,000 Liabilities (recourse) 180,000 Capital: Scarlett O'Hara Hamilton Kennedy Butler 300,000 380,000 Melanie Hamilton Wilkes 300,000 380,000 Rhett Butler 300,000 380,000 Total Liabilities & Capital $900,000 $1,320,000 A. What is Rhett Butler's gain or loss on the sale? What is the character of the gain or loss?

Answer rating: 100% (QA)

To calculate Rhett Butlers gain or loss on the sale of his partnership interest we nee... View the full answer