Kenneth's interest in the equal Island Partnership is sold to Kristen for $100,000 Cash. On the date

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Question:

Kenneth's interest in the equal Island Partnership is sold to Kristen for $100,000 Cash. On the date of the sale, the partnership tax balance sheet and the agreed fair market values were as follows:Cash - $ 340,000 (Adjusted Basis); $ 180,000 (Fair Market Value); Inventory - $-0- (Adjusted Basis); $80,000 (Fair Market Value); Other assets - $100,000 (Adjusted Basis); $120,000 (Fair Market Value); Total Assets - $440,000 (Adjusted Basis); $380,000 (Fair Market Value); Kenneth, capital - $110,000 (Adjusted Basis); $95,000 (Fair Market Value); Croix, capital - $110,000 (Adjusted Basis); $95,000 (Fair Market Value); Nassau, capital - $110,000 (Adjusted Basis); $95,000 (Fair Market Value); Bermuda, capital - $110,000 (Adjusted Basis); $95,000 (Fair Market Value); Total Partner's Capital - $440,000 (Adjusted Basis); $380,000 (Fair Market Value). Assume Kenneth's basis for his partnership interest equals his capital account. As a result of the sale, Kenneth recognizes:

A) No gain or loss

B) $10,00 Capital loss

C) $20,000 Ordinary loss income and $30,000 capital loss

D) $20,000 ordinary loss