Newton is a one-third owner of ProRite Partnership. Newton has decided to sell his interest...
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Accounting
Newton is a one-third owner of ProRite Partnership. Newton has decided to sell his interest in the business to Betty for $60,500 cash plus the assumption of his share of ProRites liabilities. Assume Newtons inside and outside basis in ProRite are equal. ProRite shows the following balance sheet as of the sale date:
Tax Basis
FMV
Assets:
Cash
$
81,000
$
81,000
Receivables
46,250
46,250
Inventory
40,500
94,950
Land
42,750
28,550
Totals
$
210,500
$
250,750
Liabilities and capital:
Liabilities
$
60,000
Capital Newton
50,167
Barbara
50,166
Liz
50,167
Totals
$
210,500
What is the amount and character of Newtons recognized gain or loss?
Amount
Character of gain or loss
Answer & Explanation
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