ST Partnership has the following assets:
Inventory value $30,000 basis $12,000
Land value $90,000 basis $48,000
Inventory is a Section 751 asset and each partner has an outside basis of $30,000. S, A 50% partner, and T, her copartner, received a partial distribution from the partnership. S received land worth $30,000 with a basis of $16,000; T received inventory worth $30,000 with a basis of $12,000. What is S’s recognized disproportionate gain, ignoring partnership income?
$7,000 capital gain
$9,000 capital gain
$9,000 ordinary income
$14,000 ordinary income