Simplify Partnership

Simplify Partnership was a general partnership that provided tax consulting services (and thus capital was not a material income-producing factor). Abel retired from the partnership. At the time of his retirement, the Simplify Partnership balance sheet appeared as follows:

Asset Adj. Basis Book Partner Tax Book
Cash $180,000 $180,000 Abel $90,000 $160,000
Acct. Rec. -0- $60,000 Baker $90,000 $160,000
Stock $60,000 $120,000 Charlie $90,000 $160,000
Blackacre $30,000 $120,000
Total: $270,000 $480,000 $270,000 $480,000

Abel received $180,000 in liquidation of his interest. The partnership agreement did not include any provision for the payment of goodwill. A § 754 election has been made. What are the tax consequences to Abel and to Simplify?

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