Gail and Harry own the GH Partnership, which has conducted business for 10 years. The bases for their partnership interests are $100,000 for Gail and $150,000 for Harry. GH Partnership has the following assets:

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, would it matter to Keith and Liz whether they purchase Gail's and Harry's partnership interests or the partnership assets from GH Partnership?

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Asset Cash Accounts receivable Inventory Building Land Basis 10,000 30,000 25,000 100,000 250,000 FMV $ 10,000 28,000 26,000 150,000 400,000 The straight-line method has been used to depreciate the building. Accumulated depreciation is $70,000