Damon owns a 20% interest as a general partner in the Vermillion Partnership, which provides consulting service. The partnership distributes $60,000 cash to Damon in complete liquidation of his partnership interest. Damons share of partnership unrealized receivables immediately before the distribution is $20,000. The partnership has no other hot assets. Assume that none of the cash payment is for goodwill. Damons basis for his partnership interest immediately before the distribution is $30,000.

c. How does the partnership treat the distribution to Damon?

d. What planning opportunities might the partnership want to consider?

e. How would your answers to part (b), (c) change if Damon was a limited partner?