Question: A, B, C and D are equal partners in the ABCD partnership. The partnership has the following assets: Cash $20,000; Inventory, I/S Basis $100,000, Book

A, B, C and D are equal partners in the ABCD partnership. The partnership has the following assets: Cash $20,000; Inventory, I/S Basis $100,000, Book $100,000 and FMV $140,000; Land, I/S Basis $100,000, Book $100,000 and FMV $800,000. Each of the partners contributed $30,000 to the partnership and the partnership has recourse liabilities equal to $100,000. N agrees to purchase As interest in the partnership for cash and his agreement to assume As share of the partnership liability.

What is the amount and character of any gain or loss to be recognized by A as a result of Ns purchase of his partnership interest?

Assume the facts set forth in 3, above, except that the FMV or the inventory is $80,000 and the FMV of the land is $860,000.

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