Answer Happy

paliei SMP ICICS 10-44 Sale of a Partnership Interest. Records of a CPA partnership show the following: Fair Market Inside Basis Value Cash... $ 8,000 $ 8,000 Accounts receivable 0 40,000 Section 1231 assets 130,000 100,000 Accumulated depreciation.. (50,000) 0 $ 88,000 $148,000 Liabilities... $ 28,000 $ 28,000 Partners' capital 60,000 120,000 $ 88,000 $148,000 The $ 1231 assets have potential $ 1245 and $ 1250 recapture of $4,000. M, a 25% partner, has an outside basis in his partnership interest of $22,000 (including 25% of partnership liabilities). M sells the 25% interest to J for $30,000 cash. a. What is the amount and character of M's recognized gain on sale? b. How would your answers differ if M's outside basis in his partnership interest had been $28,000?