Retiring partner A is to receive $120,000 for his partnership interest spread over a 4-year period and paid in installments of $30,000 per year. If A's basis is $64,000 and the payments are considered

Retiring partner A is to receive $120,000 for his partnership interest spread over a 4-year period and paid in installments of $30,000 per year. If A's basis is $64,000 and the payments are considered to be Section 736(b) payments, how much must A report in Year 1 if no election is made?

$0

$24,000

$40,000

$56,000