Simplify Partnership was a general partnership that provided tax consulting services (and thus capital was not a material income-producing factor). Abel retired from the partnership.
Simplify Partnership was a general partnership that provided tax consulting services (and thus capital was not a material income-producing factor). Abel retired from the partnership. At the time of his retirement, the Simplify Partnership balance sheet appeared as follows:
| Asset | Adj. Basis | Book | Partner | Tax | Book | |
| Cash | $180,000 | $180,000 | Abel | $90,000 | $160,000 | |
| Acct. Rec. | -0- | $60,000 | Baker | $90,000 | $160,000 | |
| Stock | $60,000 | $120,000 | Charlie | $90,000 | $160,000 | |
| Blackacre | $30,000 | $120,000 | | | | |
| Total: | $270,000 | $480,000 | | $270,000 | $480,000 | |
Abel received $180,000 in liquidation of his interest. The partnership agreement did not include any provision for the payment of goodwill. A § 754 election has been made. What are the tax consequences to Abel and to Simplify?
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Step: 1
The tax consequences to Abel are that he will recognize a capital gain o...
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Authors: William Mendenhall, Robert Beaver, Barbara Beaver
14th Edition
1133103758, 978-1133103752
