9. Marty (M) retires from MNO partnership, an accounting firm. The partnership has the following balance sheet:

Asset FMV Adj. Basis Liab./Equity FMV Adj. Basis

Cash $240,000 $240,000 Capital M $300,000 $100,000

A/R $300,000 $0 Capital N $300,000 $100,000

Land $360,000 $60,000 Capital Q $300,000 $100,000

Total $900,000 $300,000 Total $900,000 $300,000

The partnership pays Marty $150,000 a year for 2 years.

a. What are the consequences to Marty in Year 1?

b. How would the consequences in Year 1 be if instead Marty received $200,000 a year for 2 years?