CH 1 MASTERY

Exercise 11-17 (a) (LO. 6)

The River Pines LLP is equally owned by three partners and shows the following balance sheet at the end of the current tax year.

	Basis		FMV
Cash	$318,000		$318,000
Unrealized receivables	0		192,000
Land	99,000		207,000
	$417,000		$717,000
Albeira, capital	$139,000		$239,000
Azana, capital	139,000		239,000
Arthur, capital	139,000		239,000
	$417,000		$717,000

Partner Azana is an active (i.e., "general") partner retiring from the service-oriented partnership. She receives $290,000 cash, none of which is stated to be for goodwill.

a. How much of the payment is for "unstated goodwill"? The distribution results in "unstated goodwill" of $51000.

b. How is the $290,000 allocated between a 736(a) income payment and a 736(b) property payment?

The $290,000 cash payment is allocated as follows: 736(a) income payment: $ 736(b) property payment: $