Brian owns 40% of the ABC Partnership before his retirement on April 15 of the current year. On that date, his basis in the partnership interest is $40,000 including his share of liabilities. The partnership€™s balance sheet on that date is as follows:

What are the amount and character of gain or loss that Brian and the ABC Partnership recognize for the following independent retirement payments?
a. Brian receives $41,600 cash on April 15.
b. Brian receives $50,000 cash on April 15.

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Partnership's Basis FMV Assets Cash S 60,000 S 60,000 Receivables 24,000 24,000 Land 16,000 40,000 Total S124,000 Liabilities and capital Liabilities S 20,000 S 20,000 Capital-Abner 16,000 20,800 41,600 41.600 S124,000 ーBrian 32,000 -Charles 32.000 Total S100,000