The Olive Partnership makes a proportionate distribution of its assets to Jerry, in complete liquidation of his partnership interest. The distribution consists of $40,000 in cash and capital assets with a basis to the partnership of $150,000 and a fair market value of $160,000. None of the payment is for partnership goodwill. At the time of the distribution, Jerry's partnership basis is $150,000 and the partnership has no liabilities and no hot assets. If the partnership makes an optional basis adjustment election on a timely filed return, it recognizes: pls including calculation process

a. Capital gain of $40,000 and increases the basis of its remaining assets by $40,000.

b. Capital loss of $40,000 and decreases the basis of its remaining assets by $40,000.

c. No gain or loss and increases the basis of its remaining assets by $40,000.

d. No gain or loss and decreases the basis of its remaining assets by $40,000.

e. None of the above.