2. When Jerry died on April 16 of the current year, he owned a 40% interest in the JM Partnership, and Michael owns the remaining 60% interest. All his assets are held in his estate for a two-year period while the estate is being settled. Jerry's estate is his successor-in-interest for the partnership interest. Under a formula contained in the partnership agreement, the partnership must pay Jerry's successor-in-interest $40,000 cash shortly after his death plus $90,000 for each of the two years immediately following a partner's death. The partnership agreement provides that all payments to a retiring partner will first be payments for the partner's share of assets, and then any additional payments will be Sec. 736(a) payments. When Jerry died, the partnership had the following balance sheet: Partnership's Basis FMV Assets: Cash: $100,000 $100,000 Land: 200,000 300,000 Total $300,000 $400,000 Liabilities and Capital Liabilities $ 75,000 $75,000 Capital-Jerry 90,000 130,000 -Michael 135,000 195,000 Total $300,000 $400,000 Jerry's basis for the partnership interest on the date of his death was $120,000 including his $30,000 share of partnership liabilities. a. How will the payments be taxed to Jerry's successor-in-interest? b. What are the tax implications of the payments for the partnership