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, 2008, 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 and Capital

AB/Book 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 2010. What are the tax consequences to A if, in the alternative:

1. B and C purchase As partnership interest, each paying $125 cash
2. 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?
3. 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.
4. How would your analysis in (2) change if the partnership had equipment that had inherent recapture? Note: No calculations are necessary.
5. How would your answer to part (2) change if the partnership agrees to pay A the $250 over time: $50 in 2008, $100 in 2009 and a final $100 in 2010? A agrees to remain personally liable on mortgage until she receives her last payment.