Erins interest in the EPG 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. Erin will recognize

A) no gain or loss.

B) $2,000 capital loss.

C) $2,000 ordinary loss.

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