Match the following independent distribution payments in liquidation of a partner's interest in an ongoing partnership with the statements below.
-Distribution of $10,000 cash to a general partner for goodwill when goodwill is provided for in the partnership agreement, and the partnership derives most of its income from services.
A)A payment for the partner's share of partnership income under § 736a).
B)A payment for the partner's share of partnership property under § 736b).
C)The payment includes both a § 736a) and a § 736b) element.

Question

Quizplus · Accepted Answer

This payment is considered a distribution for the partner's share of partnership property under § 736(b) because it relates to the goodwill of the partnership, which is a capital asset, and the partnership agreement specifically provides for such a distribution. Payments under § 736(b) generally pertain to distributions of partnership property in liquidation of a partner's interest.

Match the Following Independent Distribution Payments in Liquidation of a Partner's