On January 1 of year one, Nupartner purchased a one-third interest in a partnership for $40,000. At the time of purchase the partnership had the following assets:

A.B. F.M.V.

Accounts Receivable $ 0 $30,000

Land $60,000 $90,000

(a)If 754 had not been elected by the partnership, what is the result to Nupartner upon collection of the receivables?

(b)What result to Nupartner in (a), above, if the partnership had made a 754 election?

(c)Who makes a 754 election? When and how must the election be made?