Can you help me p in writing a tax memo for the problem attached? citing only primary authority. 4-5 pages? I would really appreciated.

SHEET ROCK WORLD Partnership Sheet Rock World (SRW) operates a highly profitable sheet rock supply business. It is the exclusive supplier for a number notable construction firms and home repair stores, and it has an excellent reputation for reliability and service. Your client, Niklos Xavier, is thinking to sell his share in SRW to Albert Garcia on June 30, 2015. Garcia has made an offer total consideration of $550,000 ($50,000 cash down at closing and a $500,000 note secured by the partnership interest). The note will bear a 3.5 percent market rate of interest and will be payable in ten annual principal payments of $50,000 each, the first of which is due on January 1, 2016. Accrued interest will be due with each principal payment. (The stated interest rate is adequate for Purposes of 483 and 7872, and for the original issue discount rules.) Garcia also will assume SRW share of partnership liabilities outstanding upon date of sale. The projected balance sheet of the business As of June 30, 2015 is attached. This balance sheet was the basis for negotiation of the terms of the sale between Niklos and Albert Garcia. For a number of years, SRW has been Niklos Xavier main source of income. Niklos and his two partners originally founded SRW by making contributions of cash, and each partner has a tax basis in his partnership interest equal to the capital account balance plus any share of partnership liabilities allocated to the partner under 752. SRW uses an accrual method of accounting and has reported on a June 30 fiscal year since its formation many years ago. All three partners and Albert Garcia are calendar year taxpayers. Upon formation, SRW made a 444 election to use this fiscal year and has properly made its required payments under7519. The partnership also has a 754 election in effect. All profits and losses of the partnership are allocated 60 percent to Niklos Xavier, 20 percent to Jona Xavier, and 20 percent to Adelle Cantrell. This sharing ratio will continue subsequent to the sale of Nikloses's interest to Albert Garcia. The amount of guaranteed payment for Albert Garcia's services to the partnership has not yet been negotiated. According to the partnership agreement, all allocations of profit and loss are reflected in the partners' capital accounts. The capital accounts are maintained in accordance with the704(b) regulations; upon liquidation of the partnership, all distributions to partners will be made in accordance with the balances in their capital accounts. Upon liquidation, each partner is required to restore any deficit capital account balance to the partnership. Niklos Xavier/ Albert Garcia 60% Jona Xavier 20% Adelle Contrell 20% 1) Niklos Xavier has engaged you to determine the amount and character of any taxable gain generated by the sale as it currently is structured. 2) Jona Xavier (Niklos's son) and Adelle Contrell (not related to the Xaviers) are the other partners in SRW. Under the terms of the partnership agreement, they both must approve the sale of Niklos's interest to Albert Garcia. During the last several years, Niklos has been in poor health and has been unable to devote the necessary time to the partnership business. Consequently, both Jona and Adelle are eager for Garcia to take Niklos's place as managing general partner. Garcia plans to work in the business full time, and should be able to contribute considerable energy, experience, and talent to the operation. The existing partners are concerned, however, about any unexpected or adverse tax consequences of the proposed sale to SRW, or to them as continuing partners. Albert Garcia also wants to understand the tax consequences of his becoming a partner. These three individuals have requested that you analyze the transfer of the partnership interest from Niklos Xavier to Garcia from The point of view of the ongoing partnership, providing them with a summary of any significant tax consequences. They also would appreciate any suggestions by which they could minimize or eliminate any tax problems that you uncover. Sheet Rock World Partnership Projected Balance Sheet June 30, 2015 ASSETS Cash & Deposits Trade A/R Marketable Securities Inventory Furniture & Fixtures Tax Basis $37,000 $34,000 $40,000 $462,000 $136,000 Accumulated Depreciation TOTALS ($59,000) $659,000 Trade A/P Capital Accounts Totals Fair Market Value $37,000 $34,000 $36,000 $575,000 $77,000 $759,000 $50,000 Niklos Xavier Albert Garcia Adelle Contrell $360,000 $120,000 $120,000 $600,000 $650,000 This case study involves the installment sale of an interest in a partnership that owns inventory. The sale triggers a termi- nation of the partnership under IRC 708. The case study also requires the students to analyze the transaction from the purchaser's point of view, and to determine the effects of a 754 election on the purchaser's basis in the proportionate share of partnership assets. http://highered.mheducation.com/sites/007802532x/information_center_view0/index.html