Kathy is a 25 percent partner in the KDP Partnership and receives $134,000 cash in complete liquidation of her partnership interest. Kathy's outside basis immediately before the distribution is $146,000. KDP currently has a $754 election in effect and has no hot assets or liabilities. Which of the following statements is true? Multiple Choice KDP will increase the basis of its assets by $12,000 and Kathy will recognize a $12,000 loss on the distribution. KDP will increase the basis of its assets by $12,000 and Kathy will recognize a $12,000 gain on the distribution. KDP will decrease the basis of its assets by $12,000 and Kathy will recognize a $12,000 loss on the distribution. KDP will decrease the basis of its assets by $12,000 and Kathy will recognize a $12,000 gain on the distribution