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H's $30000 partnership interest is terminated through a capital asset distribution having a FMV of $50000 (partnership basis of $40000) and cash...

H's $30000 partnership interest is terminated through a capital asset distribution having a FMV of $50000 (partnership basis of $40000) and cash $10000. Assuming that an optional basis adjustment election is in effect, which of the following statement is true?

  • H's basis in the capital asset is $20000
  • H does not recognize gain or loss and takes $3000 basis in the capital asset received
  • H recognizes a gain of $30000
  • The partnership increases the basis of its remaining assets by $30000.

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