Sarah is a 50 percent partner in the SF Partnership and has an outside basis of $56,000 at the end of the year prior to any distributions. On December 31, Sarah receives a proportionate operating distribution of $20,000 cash. What is the amount and character of Sarah's recognized gain or loss and what is her basis in her partnership interest?

Multiple Choice

• $20,000 ordinary income, $56,000 basis.

• $0 gain, $56,000 basis.

• $20,000 ordinary income, $36,000 basis.

• $0 gain, $36,000 basis.

Answer rating: 100% (QA)

Solution Amount and character of Sarahs r... View the full answer