Assume the same basic fact as in problem 1 (on the file) except ABC is an accrual method partnership so that the accounts receivable have an adjusted basis of $45,000 and A has an outside basis of $90,000. For each part determine only the amount of A's Section 751(a) ordinary income. A is selling his interest for $135,000.

What result when A sells his interest to D, if the partnership owns no inventory but has a 50% interest in another partnership, whose only assets are inventory with a basis of $150,000 and a value of $180,000.

What result if in addition the partnership had a contract worth $30,000 to perform real estate management services for the next ten years?

Partner A owns a one-third interest in the ABC cash method, calendar year general partnership, which manufactures and sells inventory. A, B, and C, the original partners, each made initial cash contributions of $75,000. All income has been distributed as earned. On January 1st, A sells his interest in the partnership to D. Consider the tax consequences of the sale to A, assuming he has owned his partnership interest for several years. The balance sheet of the partnership is as follows: Cash Inventory Accounts Receivable Capital Asset A.B. $45,000 $75,000 $0 FMV $45,000 $90,000 $45,000 $105,000 $225,000 225,000 405,000 A B C A.B $75,000 $75,000 $75,000 FMV $135,000 $135,000 $135,000 225,000 405,000