Graham sold his 30% interest in CSN Partnership in the current year. CSN was formed 10 years ago, and it reports on the cash method. Grahams adjusted basis in his partnership interest was $32,700, and CSN had no liabilities on the date of sale. CSN had the following assets at the time Graham sold his interest

	Adjusted Basis	FMV
Cash	$20,000	$20,000
Accounts Receivable	-0-	9,000
Inventory	6,000	10,000
Machinery & Equipment (original cost of 12,000)	3,000	6,000
Land	80,000	100,000
	$109,000	$145,000

Graham sold his interest for $43,500. What is the amount and character of his gain?

Ordinary income Capital Gain

A. $1,200 $9,600

B. $3,600 $7,200

C. $4,800 $6,000

D. $0 $10,800

Please explain your process. thank you.