Manny Has an Outside Basis of $180,000 in the MNO

Multiple Choice

Manny has an outside basis of $180,000 in the MNO Partnership as of December 31 of the current year.On that date the partnership liquidates and distributes to Manny a proportionate distribution of $130,000 cash and inventory with an inside basis to the partnership of $20,000 and a fair market value of $30,000.In addition, Manny receives a desk which has an inside basis and fair market value of $1,400 and $3,600, respectively.None of the distribution is for partnership goodwill.How much gain or loss will Manny recognize on the distribution, and what basis will he take in the desk?

A) $28,600 loss; $1,400 basis.
B) $26,400 loss; $3,600 basis.
C) $16,400 loss; $3,600 basis.
D) $0 loss; $30,000 basis.
E) None of the above.