Consider the following balance sheet for DEF Partnership.

Note: Land A$,$ B$,$ and C are Sec. $1231$ property, and each partner's outside basis is $$30,000.$

Suppose Daniel wishes to exit the partnership completely. After discussion with Edward and Frances, the partners agree to let Daniel choose on of the following three options:

Daniel takes a liquidating distribution of $$60,000$ cash.

Daniel takes a pro rata liquidating distribution of $$20,000$ cash, $$20,000$ receivables, and land $)=($$$20,000.$

Daniel sells his entire partnership interest to Doris for $$60,000.$

Required:

A$.$ Determine the tax consequences to Daniel of each option, including gains $($losses$),$ realized, recognized and deferred; character of gains $($losses$)$; and basis of assets.

B$.$ Discuss the relative merits of each option to Daniel. That is$,$ what are the advantages or disadvantages of each option? What factors could sway your recommendation one way or the other?