Siegfried is a 50 percent partner in the Jutland Partnership and has decided to terminate his partnership interest. Siegfried is considering two options as potential exit strategies. The first is to sell his partnership interest to the two remaining 25 percent partners, Sigmund and Sieglinde, for $125,000.00 cash and the assumption of Siegfried's share of Jutland's liabilities. Under this option, Sigmund and Sieglinde would each pay $112,500 for half of Siegfried's interest. The second option is to have Jutland liquidate Siegfried's partnership interest with a proportionate distribution of the partnership assets. Siegfried's basis in his partnership interest is $140,000 including Siegfried's share of Jutland's liabilities. Jutland reports the following balance sheet as of the termination date: Liabilities and Capital LiabilitiesCapital-SiegfriedCapital-SigmundCapital-SieglindeTotals$70,000$105,000$62,500$62,500$300,000 1. If Sigfried sells his partnership interest to Sigmund and Sieglinde for $125,000, what are the amount and character of Sigfried's recognized gain or loss? 2. Sigmund and Sieglinde each have a basis in Jutland of $62,500.00 before any purchase of Sigfried's interest. What is Sigmund's and Sieglinde's bases in their partnership interests following the purchase of Sigfried's interest? 3. If Jutland liquidates Sigfried's partnership interest with a proportionate distribution of the partnership assets (\$35,000 deemed cash from debt relief, $25,000 of actual cash, and half of the remaining assets), what are the amount and character of Sigfried's recognized gain or loss? 4. If Jutland liquidates Sigfried's interest, what is Sigfried's basis in the distributed assets? 5. Compare and contrast Sigfried's options for terminating his partnership interest. Assume that Sigfied's marginal tax rate is 35 percent, and his capital gains rate is 15 percent. No Tax Return Required