The RBD Partnership Balance Sheet on August 31 of the Current

Multiple Choice

The RBD Partnership balance sheet on August 31 of the current year is as follows:

On that date,Rachel sells her one-third partnership interest to Bill for $300,000,including cash and relief of Rachel's share of the nonrecourse debt.The nonrecourse debt is shared equally among the partners.Rachel's outside basis for her partnership interest is $250,000.How much capital gain and/or ordinary income will Rachel recognize on the sale?

A) $20,000 capital gain; $30,000 ordinary income.
B) $30,000 capital gain; $20,000 ordinary income.
C) $50,000 capital gain; $0 ordinary income.
D) $0 capital gain; $50,000 ordinary income.
E) None of the above.