I have a client that is a partner in a partnership. She is retiring and selling her share in the partnership for $250,000. Her basis in the partnership is 1.2 million. Is the loss treated as ordinary or a capital loss?

ANSWER

Expert Mark Anderson's Answer:

Since a partnership interest is usually a capital asset, the sale of a partnership interest generally results in capital gain or loss. The exception is that the gain is ordinary to extent attributable to unrealized receivables or appreciated inventory pursuant to IRC Section 751. As with any tax issues, it will depend upon the taxpayer's specific situation.

Mark Anderson, JD

Montana

21 yrs experience

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