Marcella Is a 40% Nonmanaging Member Treated as a Limited

Multiple Choice

Marcella is a 40% nonmanaging member treated as a limited partner) in the MNO LLC in which capital is a material income-producing factor. MNO has inventory with a basis of $200,000 and a value of $250,000 but no other hot assets. Marcella's basis in the LLC interest is $80,000. If she receives a distribution of $180,000 cash in liquidation of her interest in the LLC, which one of the following statements is not true?

A) Because this is a capital-intensive business, the entire payment is a §736b) payment.
B) Because Marcella is treated as a limited partner, the entire payment is a §736b) payment.
C) MNO can deduct the $20,000 paid for Marcella's share of ordinary income related to the inventory.
D) Marcella will recognize ordinary income of $20,000 related to the inventory, because this is a disproportionate distribution.
E) All of the above statements are true.