LO.6 Gail and Harry own the GH Partnership. They have conducted the business as a partnership for 10 years. The bases for their partnership interests are as follows. Gail $100,000 Harry $150,000 GH Partnership holds the following assets. Asset Cash Accounts receivable Inventory Building Land Basis FMV $ 10,000 $ 10,000 30,000 28,000 25,000 26,000 100,000 150,000 250,000 400,000 "The straight-line method has been used to depreciate the building. Accumulated depreciation is $70,000. Gail and Harry sell their partnership interests to Keith and Liz for $307,000 each.

a. Determine the tax consequences of the sale to Gail, Harry, and GH Partnership.

b. From a tax perspective, should it matter to Keith and Liz whether they pur- chase Gail and Harry's partnership interests or the partnership assets from GH Partnership? Explain.