At year end, Margie, at 30% partner in a four person Partnership had an outside basis of $75,000 in the partnership, including a $60,000 share of the liabilities. Margie's share of partnership recapture potential was $40.000. Everyone uses the calendar year. On the first day of the tax year, Margie sells her partnership interest to Juan for $120,000 cash and the assumption by Juan of the appropriate partnership liabilities.

Write a client letter to Margie explaining the income tax consequences to Margie.