Part B: Consequences to Buyers Assignment: Logic: Chapter Ten, pp. 152-162 Code: 732(a) 8: (d), 742, 743(a(d), 754, 755(a) & (b). Regulations: 1.7041(b)(2)(iv)(l), (119(1), (2) 8: (5); 1.7041(b)(5) Ex. (13)(iii) 8: (iv), 1.742-1, 1.743-1(a)(e) 8: (j), 1.754-1, 1.755-l(a)(1) & (b)(1)-(3). Problems: 1. In the introductory example above, what is the Buyer's initial outside basis in his partnership interest? In the absence of any elections, how much income will the Buyer report if the partnership collects the receivables? Might Buyer find that result problematic? 2. P purchased the 1/3 interest from A Problem 2 in Part A above for $500 cash. What is P's initial outside basis and the balance in her capital account at the time of purchase? 3. In the absence of a 754 election, what would be the tax consequences to P if she held the interest for three years and then sold it for $500. Assume that during this period of time the partnership engaged in no transactions and there was no change in the value of its assets (ignore cost recovery allowances)