On June 30 of the Current Tax Year, Sal Sells

Multiple Choice

On June 30 of the current tax year, Sal sells her 40% interest in the STU Partnership to new partner James for $300,000, including Sal's share of partnership liabilities. At the beginning of the tax year, Sal's basis in her partnership interest was $80,000 (excluding her share of partnership debt) . The partnership reported income of $240,000 for the year, and Sal's share of partnership debt was $100,000 at the sale date. (Assume the partnership uses a monthly proration of income.) At the sale date, the partnership's assets consist of cash ($390,000) , land (basis of $180,000,
Fair market value of $210,000) , and unrealized receivables (basis of $0, fair market value of $150,000) . What is Sal's basis at the sale date, and how much gain must Sal recognize?

A) $180,000 basis, $60,000 ordinary income, $60,000 capital gain.
B) $128,000 basis, $60,000 ordinary income, $112,000 capital gain.
C) $228,000 basis, $60,000 ordinary income, $12,000 capital gain.
D) $180,000 basis, $0 ordinary income, $120,000 capital gain.
E) $228,000 basis, $12,000 ordinary income, $60,000 capital gain.