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In: AccountingGreg, Yenny, Rachel, and Harry form an equal partnership betweenpartners. It has the following assets:...Greg, Yenny, Rachel, and Harry form an equal partnership betweenpartners. It has the following assets: $30,000 in cash, inventoryworth $40,000 in which the partnership has a basis of $20,000, anda capital asset worth $20,000 in which the partnership has a basisof $12,000. The partnership distributes $22,500 in cash to Greg inliquidation of Greg's interest in the partnership when Greg has abasis of $15,500. What are the tax consequences? Explain theanswerA. Greg recognizes a capital gain of $7,000. The partnershipdoes not adjust the basis of any of its assets.B. Greg recognizes an ordinary gain of $5,000 and a capital gainof $2,000. The partnership does not adjust the basis of any of itsassets unless an election under Section 754 is in effect.C.Greg recognizes an ordinary gain of $5,000 and a capital gainof $2,000. The partnership’s overall basis in inventory isincreased by $5,000.D.Greg recognizes a capital gain of $7,000. The partnershipincreases its basis in property by $7,000 due Greg's recognition ofgain.