Derrick's interest in the DEF Partnership is liquidated when his basis in the interest is $30,000. He receives a liquidating distribution of $20,000 cash and inventory with a basis of $8,000 and an FMV of $30,000. Derrick will recognize

A.

$2,000 capital loss.

B.

$10,000 capital loss and $20,000 ordinary loss.

C.

no gain or loss.

D.

$2,000 ordinary loss.