Mr. and Ms. Rogers partnership owns the following assets:

	Adjusted basis	FMV
Accounts receivable	$ 0	$ 60,000
Inventory	20,000	30,000
Machinery & equipment*	50,000	90,000
Buildings**	120,000	170,000
Land	80,000	140,000
Total	$270,000	$490,000

* Potential 1245 recapture of $45,000

** Straight-line depreciation was used

Mr. and Ms. Rogers each have a basis for their partnership interest of $135,000. Calculate their combined recognized gain or loss and classify it as capital or ordinary if they sell their partnership interests for $500,000.

$230,000 ordinary income.

$230,000 capital gain.

$115,000 ordinary incoome, and $115,000 capital gain.

$110,000 ordinary income and $120,000 capital gain.