Basic Facts: DEF is an equal general partnership engaged in medical practice. On January 1, 2007, D died, triggering the partnerships buy/sell agreement. Just prior to his death, Ds outside basis was $130. According to the agreement, the partnership must pay Ds sole beneficiary, B, $500 in liquidation of her interest in the partnership. Neither the partnership agreement nor the buy/sell agreement mentions goodwill. There is no 754 election in place. On the date of death, DEFs balance sheet (with FMVs) was as follows:

Assets Liabilities & Capital

AB/Book FMV Liabilities $150

Cash $120 $120

Accts Rec. 0 150

Installment Oblig. 150 270

Equipment 90 300

Land 30 510

Goodwill 0 300

$390 $1650

Capital Accounts

Tax/Bk FMV

D $80 $500

E 80 500

F 80 500

$240 $1500

Assume that the equipment was purchased by the partnership for $400, and that the land is used in the partnerships business.

Questions:

1. Before the distribution to B in liquidation of her interest in the partnership, what is her outside basis?
2. If there were a 754 election in place what would be the amount of the 743(b) adjustment, and among which assets (and in what amount) would it be allocated?
3. What are the income tax consequences to B of the $500 distribution?
4. What difference would it have made if the agreement explicitly allocated $100 to goodwill?
5. What difference would it have made if there were no buy/sell agreement and B (who is also a doctor) becomes a partner in Ds place?