3- Partnership MAN makes a liquidating proportionate distribution to M who has a one-fourth interest in the capital and profits of MAN. M's basis in her partnership interest is $40,000. She receives cash of $15,000 and inventory with a basis of $20,000 and fair market value of $27,000. How much gain or loss does M recognize and what is her basis in the inventory after the distribution?

Gain/Loss Basis

A. $2,000 $27,000

B. $ 0 $20,000

C. ($5,000) $20,000

D. ($5,000) $25,000