The December 31 balance sheet of the RST General Partnership reads as follows

	Adjusted
	Basis	FMV
Cash	$ 65,000	$ 65,000
Receivables	0	7,500
Capital and 1231 assets	55,000	100,000
Total	$120,000	$172,500
Roy, capital	$ 40,000	$ 57,500
Sue, capital	40,000	57,500
Ted, capital	40,000	57,500
Total	$120,000	$172,500

The partners share equally in partnership capital, income, gain, loss, deduction, and credit. Ted's adjusted basis for his partnership interest is $40,000. On December 31, general partner Ted retires from the partnership, receiving a $60,000 cash payment in liquidation of his interest. The partnership agreement states that $2,500 of the payment is for goodwill. Which of the following statements about this distribution is false?

a. If capital is not a material income-producing factor to the partnership, the 736(a) payment will be $2,500.

b. The payment for Ted's share of goodwill will create $2,500 of ordinary income to him.

c. If capital is a material income-producing factor, the entire $60,000 payment will be a 736(b) property payment.

d. The partnership can deduct any amount that is a 736(a) payment because it will be determined without regard to partnership profits.