Mikey, Ronny and Waldo are equal owners of a FireHot LLC being treated as a partnership. FireHot uses the accrual method of accounting and is a manufacturer of matches. On June 30, 2017, FireHot has accounts receivable of $100,000, match inventory of $75,000, fixed assets with original cost basis of $90,000, accumulated depreciation of $60,000, copyrights of $80,000 and total liabilities of $120,000. Mikey, Ronny and Waldo each originally invested $130,000 and every year on December 31, the LLC distributes all of its profits to the owners in cash. Mikey wants to get out of the fire business and into something less explosive. Ronny and Waldo offer to buy Mikey out of his FireHot LLC interest for $200,000. The current fair value of the receivables is $95,000 and the inventory is worth, at least according to Waldo, $110,000. What and how much will be the character of Mikeys gain assuming he sells for the offer of $200,000?

a. $35,000 ordinary income and $35,000 capital gain

b. $30,000 ordinary income and $40,000 capital gain

c. $40,000 ordinary income and $25,000 capital gain

d. $0 ordinary income and $70,000 capital gain