Suzanne retires from the BRS Partnership when the basis of her one-third interest is $105,000, which includes her share of liabilities. At the time of her retirement, the partnership had the following assets:

The partnership has $60,000 of liabilities when Suzanne retires. The partnership will pay Suzanne cash of $130,000 to retire her partnership interest.
a. What are the amount and character of the gain or loss Suzanne must recognize?
b. What is the impact of the retirement on the partnership and the remaining partners?

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Assets Partnership's Basis FMV Cash S145,000 $145,000 40,000 220,000 Receivables 40,000 Land 130,000 Total $315,000 S405,000