Norton's adjusted basis in his partnership interest at the beginning of the tax year

is $$35,000.$ The partnership has operating income of $$20,000$ for the current year.

Norton is a

$50$ percent partner, and he receives a current distribution of $$40,000$ cash this year.

What is$/$are the tax effect$($s$)$ of these events?

I. Norton recognizes $$40,000$ of ordinary income due to the distribution.

II$.$ Norton's adjusted basis in his partnership interest at the close of the tax year is

zero.

III. Norton recognizes $$10,000$ of ordinary income for the year.

a$)$ Statements II and III are correct

b$)$ Statement I is correct

c$)$ Statements I, II$,$ and III are correct

d$)$ Statement III is correct