Jim sells her interest in Judd Enterprises, LLC (a partnership selling movies and music) to Wynona (they are unrelated). At the time of the sale, Judd had the following balance sheet:

AB FMV

Cash $300,000 $300,000

Accounts Receivable $0 $200,000

Inventory $200,000 $500,000

Land $200,000 $500,000

Total $700,000 $1,500,000

Debt $300,000 $300,000

Capital, Gary $200,000 $600,000

Capital, Jim $200,000 $600,000

Total $700,000 $1,500,000

The sales price is $800,000. Jim's basis in her partnership interest is $350,000.

a. What are the tax consequences to Jim?

b. What basis will Wynona take in her partnership interest?

c. If a 754 election is in place, what will the balance sheet look like after the transaction?