Brooke, Baker, and Bulstrode own 25%, 25%, and 50% interests, respectively, in the BBB Partnership. BBB is a cash basis tax entity with the following balance sheet:

Assume that liabilities are shared proportionately by the partners and that each partner€™s capital account equals the partner€™s basis before considering liabilities. On the balance sheet date, Brooke purchases Baker€™s 25% interest in the partnership, paying Baker $175 cash and assuming Baker€™s share of the partnership liabilities. As a result of this buyout of her partnership interest, what is the total gain on sale that Baker should report on her individual tax return?

a. $112.50

b. $150.00

c. $187.50

d. $212.50

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Fair Market Value Tax Basis $250 Cash $250 250 Accounts Receivable Goodwill 350 $250 $850 Total Assets $150 $150 Liabilities Brooke, capital Baker, capital Bulstrode, capital Total liabilities & capital 25 175 25 175 50 350 $250 $850 '