Ariel has a basis of $80,000 in the ABC Partnership as of December 31. On that date, the partnership liquidates and distributes to Ariel a pro rate distribution of $30,000 cash and inventory with a basis to the partnership of $40,000 and a fair market value of $45,000. How much gain or loss will Harry recognize on the distribution, and what basis will he take in the inventory?

a. $10,000 loss; $40,000 basis

b. $0 loss; $50,000 basis

c. $0 loss; $40,000 basis

d. $5,000 loss; $45,000 basis