Barry Owns a 25% Interest in a Continuing Partnership

Multiple Choice

Barry owns a 25% interest in a continuing partnership.The partnership distributes a $20,000 year-end cash bonus to all the partners.In a proportionate nonliquidating distribution,the partnership also distributed property (basis of $2,000;fair market value of $3,000) to Barry.Immediately before the distribution,Barry's basis in the partnership interest was $30,000.As a result of the distribution,Barry recognizes:

A) No gain or loss.
B) Ordinary loss of $7,000.
C) Capital loss of $7,000.
D) Ordinary loss of $8,000.
E) Capital loss of $8,000.