TXX5771 Betty is a one-third partner in the BCD Partnership. The partnership has the following assets:

TXX5771 Betty is a one-third partner in the BCD Partnership. The partnership has the following assets:

Fair Market Value
Cash                                       $30,000                                              $30,000
Accounts Receivable                            0                                             60,000
Total Assets                           $30,000                                               $90,000
Capital – Betty                                    $10,000                                             $30,000
Capital – Carry                                     10,000                                                30,000
Capital-   Darry                                    10,000                                                 30,000
Distribution of one-half of the receivables to Betty:
Betty’s interests before and after the distribution:
                                      Pre-Distribution        Post-Distribution     Change
Ordinary Income Assets:
   Accounts Receivable       $20,000              $30,000                     $10,000
 Other Assets:
    Cash                                     $10,000                 0                          (10,000)
a)What are the tax consequences to Betty?
b)Will Code Section 751(b) apply? If so, why? If not, why not?
 
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