The Rascals Company is a general partnership with four partners: Felix, Eddie, Gene, and Dino. Felix is planning to retire. Its balance sheet is:
Loan ( not guaranteed)
Capital- Felix (25%)
Capital- Eddie, Gene & Dino (75%)
Felix is retiring from the partnership. The partnership pays him $359,000 in cash as complete liquidation of his partnership interest. Determine the fair market values of the unknown numbers above, determine Felixâ€™s gain or loss and character thereof in two situations:
- The partnership agreement provides for an allocation to goodwill upon liquidation of a partnerâ€™s interest; and
- The partnership agreement does not provide for an allocation to goodwill.