CHAPTER 6 SALES & EXCHANGES OF INTERESTS 3. The DEF cash method general partnership, which has not made a 754 election, had the following balance sheet at the time G purchased D's interest for $50,000. D contributed the inventory to the partnership at a time when the value of the inventory was $15,000. Assets Partners' Capital ?.?. FM.V. 50,000 50,000 Inventory 30,000 10,000 Land 270,00090,000 $350,000 $150,000 A.B. F.M.V. $100,000 50,000 125,000 50,000 125,00050,000 $350,000 $150,000 Cash (a) Will the basis of the partnership's assets be adjusted under as a result of D's sale to G? Should G urge the partnership to make a 754 election? (b) Assuming no adjustments are made to the basis of the partner- ship's assets, what will be the result to G if the partnership sells the inventory for $10,000? What result to G if the partnership sells the land for $90,000? CHAPTER 6 SALES & EXCHANGES OF INTERESTS 3. The DEF cash method general partnership, which has not made a 754 election, had the following balance sheet at the time G purchased D's interest for $50,000. D contributed the inventory to the partnership at a time when the value of the inventory was $15,000. Assets Partners' Capital ?.?. FM.V. 50,000 50,000 Inventory 30,000 10,000 Land 270,00090,000 $350,000 $150,000 A.B. F.M.V. $100,000 50,000 125,000 50,000 125,00050,000 $350,000 $150,000 Cash (a) Will the basis of the partnership's assets be adjusted under as a result of D's sale to G? Should G urge the partnership to make a 754 election? (b) Assuming no adjustments are made to the basis of the partner- ship's assets, what will be the result to G if the partnership sells the inventory for $10,000? What result to G if the partnership sells the land for $90,000