This example relates to the commentary at I8.337 and is concerned with the creation of a partnership under which one partner has an option to acquire another partner's share, on the latter's death or retirement, for less than full market value, and considers the effect of that death.
Father and Son have been in partnership for eight years. The capital accounts stand at £150,000 to Father and £90,000 to Son but the market value of the tangible assets is £360,000. There is goodwill worth £480,000 which is not in the accounts.
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