RBP Partnership is a service-oriented partnership that has three equal general partners. One of them, Barry, sells his interest to another partner, Dale, for $90,000 of cash and the assumption of Barrys share of partnership liabilities. On the sale date, the partnerships cash basis balance sheet is as follows. Assume that the capital accounts before the sale reflect the partners bases in their partnership interests, excluding liabilities. The payment exceeds the stated fair market value of the assets because of goodwill that is not recorded on the books.

Basis FMV Basis FMV

Cash $120,000 120,000 Note payable $ 30,000 $ 30,000

Accounts receivable 0 90,000 Capital accounts

Capital assets 30,000 75,000 Barry 40,000 85,000

David 40,000 85,000 Dale 40,000 85,000

Total $150,000 $285,000 Total $150,000 $285,000

A. What is the total amount realized by Barry on the sale?

B. How much, if any, ordinary income must Barry recognize on the sale?

C. How much capital gain must Barry report?

D. What is Dales basis in the partnership interest acquired?