ABC is an equal general partnership in which capital is not a material producing factor (i.e., a service partnership). A is planning to retire. On January 1 of Year 1, As outside basis is $100. The partnership has made a 754 election. On this date, ABCs balance sheet is as follows (expanded to include goodwill and fair market values):

	Assets				Liabilities & Capital
		AB/Bk		FMV	Mortgage $150
Cash		$120		$120
Accts Rec.		0		75
Building		90		255
Land		90		300
Goodwill		0		150
		$300		$900
					Capital Accounts
					Tax/Bk FMV
				A	$50 $250
				B	50 250
				C	50 250
					$150 $750

Assume that no principal payments are due on the mortgage until Year 5. What are the tax consequences to A if, in the alternative:

B and C purchase As partnership interest, each paying $125 cash.

The partnership makes a lump sum payment to A in the amount of $250 in complete liquidation of As interest in the partnership, and the agreement makes no reference to partnership goodwill?

The partnership makes a lump sum payment to A in the amount of $250 in complete liquidation of As interest in the partnership. Under the partnership agreement, $50 of the payment is specifically allocated to As share of the partnerships goodwill.

How would your analysis in (2) change if the partnership had equipment that had inherent recapture? Note: No calculations are necessary.

How would your answer to part (2) change if the partnership agrees to pay A the $250 over time: $50 in Year 1, $100 in Year 2 and a final $100 in Year 3? A agrees to remain personally liable on mortgage until she receives her last payment.

How would your analysis in part (2) be different if the partnership were capital intensive? Note: No calculations are necessary.