Tina Sells Her 1/3 Interest in the TAX Partnership to James

Multiple Choice

Tina sells her 1/3 interest in the TAX Partnership to James for $60,000 cash plus the assumption of Tina's $4,000 share of partnership debt. On the sale date, the partnership balance sheet and agreed-upon fair market values were as follows: As a result of the sale, Tina recognizes:

A) No gain or loss.
B) $34,000 capital gain.
C) $38,000 capital gain.
D) $14,000 ordinary income and $20,000 capital gain.
E) $14,000 capital gain and $24,000 ordinary income.