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31 October, 11:03

Jerry is a 30 percent partner in the JJM Partnership when he sells his entire interest to Lucia for $82,750 cash. At the time of the sale, Jerry's basis in JJM is $54,250. JJM does not have any debt or hot assets. What is Jerry's gain or loss on the sale of his interest?

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  1. 31 October, 11:15
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    Jerry's gain on the sale = $28,500

    Explanation:

    When Jerry sells his interest in JJM to Lucia his basis ($54,250) is what he owes and will be taken out of the proceeds he will get for selling his interest in the company.

    Therefore

    Jerry's gain on the sale = Amount of sale - Jerry's basis

    Jerry's gain on the sale = 82,750 - 54,250

    Jerry's gain on the sale = $28,500
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