On July 1,Joseph,a 10% Owner,sells His Interest in ABC Partnership

Multiple Choice

On July 1,Joseph,a 10% owner,sells his interest in ABC Partnership to Andy,an outsider,for $165,000 cash and the release from $20,000 of partnership liabilities.Joseph's partnership interest at the beginning of the year was $120,000.The partnership earned income through June 30 of $100,000.Joseph's share of partnership liabilities increased by $5,000 from January 1 to June 30.What are the tax consequences to Joseph on the sale of his partnership interest (assume the partnership does not hold any inventory or unrealized receivables) ?

A) $45,000 capital gain
B) $50,000 capital gain
C) $55,000 capital gain
D) $65,000 capital gain