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This text discusses a sales partnership interest involving lime, lemon, and orange as equal partners in Skittles Limited Liability Partnership. Lime sells her entire interest to a new partner, green apple, for $500 cash. The tax consequences to each partner and the partnership on the sale and purchase are examined. Lime's outside basis is $250, and Skittles' balance sheet includes different assets and liabilities. Skittles purchased a machine three years ago for $120 with $120 depreciation taken on the building since acquisition five years ago.
