Courtney, Tod, and William are equal partners in the CTW Partnership. The partnership balance sheet reads as follows on December 31 of the current year:

Basis FMV Cash $ 75,000 $ 75,000 Unrealized receivables -0- 30,000 Land 45,000 75,000 Total $120,000 $180,000

Courtney, capital $ 40,000 $ 60,000 Tod, capital 40,000 60,000 William, capital 40,000 60,000 Total $120,000 $180,000

Partner William has an adjusted basis of $40,000 for her partnership interest. If William sells his entire partnership interest to new partner Jackson for $60,000 cash, how much capital gain and ordinary income must William recognize from the sale?

a. $20,000 ordinary income. b. $20,000 capital gain. c. $10,000 ordinary income; $10,000 capital gain. d. $30,000 ordinary income; $10,000 capital loss. e. None of the above