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  1. Partner D is adamant that computers are more interesting than partnerships and decides he/she must bail out.  To the delight of D a White Knight, Mr. F, agrees to buy his interest for the fair market value of $61,500.  The balance sheet immediately before the sale of Ds interest to F is as follows:


Balance Sheet

               Inside        743(b) Basis        

               Basis        (Partner E)        FMV

       Cash        $        50,000        $        -        $        50,000

       Asset 1                7,500                -                1,000

       Asset 2                12,000                -                2,000

       Asset 3                20,000                531                30,000

       Asset 4                40,000                797                60,000

           Total assets        $        129,500        $        1,328        $        143,000


       Liabilities        $        20,000        $        -        $        20,000

       Capital

       A (10%)                10,950                -                12,300

       E (10%)                10,950                1,328

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