Question - At the end of last year, Ben, a 40% partner in the four-person BBJR Partnership, has an outside basis of $50,000 in the partnership, including a $40,000 share of partnership debt. Ben's share of the partnership's § 1245 recapture potential is $25,000. All parties use the calendar year. Describe the income tax consequences to Ben in each of the following independent situations that take place in the current year:
a) On the first day of the tax year, Ben sells his partnership interest to Marilyn for $80,000 cash and the assumption by Marilyn of the appropriate share of partnership liabilities.
b) Ben dies after a lengthy illness on April 1of the current year. Ben's brother immediately takes Ben's place in the partnership.