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How much gain will linda report as a result of the sale

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Question - Linda pays $100,000 cash for Jerry's ¼ interest in the JILL Partnership. The partnership has a Sec. 754 election effect. Just before the sale of Jerry's interest, JILL's balance sheet appears as follows:

Partnership's Basis FMV

Assets:

Cash $75,000 $75,000

Land $225,000 $325,000

Total $300,000 $400,000

Partners' capital

Jerry $75,000 $100,000

Instrument Corp $75,000 $100,000

Logo Corp $75,000 $100,000

Lighthouse Corp $75,000 $100,000

Total $300,000 $400,000

a. What is Linda's total optional basis adjustment?

b. If JILL Partnership sells the land for its $325,000 FMV immediately after Linda purchases her interest, how much gain or loss will the partnership recognize?

c. How much gain will Linda report as a result of the sale?

Reference no: EM131915581

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