Joan is a 30 percent partner in the OJT Partnership when she sells her entire interest to Crissy for $100,000 cash. At the time of the sale, Joan's basis in OJT is $63,000 (which includes her $10,000 share of OJT liabilities). OJT does not have any hot assets. What is the amount and character of Joan's gain or loss on the sale?
What will be an ideal response?
$47,000 capital gain.
Joan's gain is determined as the amount realized of $110,000 ($100,000 cash + 10,000 debt relief) minus Joan's outside basis in OJT of $63,000.
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