A partnership has accounts receivable with a basis of $0 and a fair market value of $10,000 and depreciation recapture potential of $15,000.All other assets of the partnership are either cash,capital assets,or § 1231 assets.If a purchaser acquires a 30% interest in the partnership from another partner,the selling partner will be required to recognize ordinary income of $7,500.

Question

Quizplus · Accepted Answer

According to the information given, the accounts receivable have a fair market value of $10,000 and depreciation recapture potential of $15,000, which means that the selling partner will have to recognize ordinary income of $7,500 when a 30% interest is sold. Therefore, the statement is true.

A Partnership Has Accounts Receivable with a Basis of $0