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:
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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