James Received a Distribution of $110,000 Cash in Liquidation of His

James received a distribution of $110,000 cash in liquidation of his 25% managing general partner) interest in the JKL LLP. JKL is a service-oriented entity. Before the distribution, the LLP's assets consisted of $200,000 cash, land basis of $40,000, value of $100,000), unrealized receivables basis of $0, value of $100,000), and goodwill basis of
$0, value of $40,000). James negotiated the $10,000 portion of the payment that is for goodwill; the partnership agreement does not address payments to retiring partners for goodwill. James will recognize $35,000 of ordinary income from his §736a) payment; the remaining $75,000 distribution is treated as a § 736b) property payment for his partnership interest.