Jessica is a 25 percent partner in the JRL Partnership. On January 1, JRL distributes $40,000 cash to Jessica. JRL has no hot assets or liabilities at the date of the distribution. Jessica's basis in her JRL partnership interest is $28,000. What is the amount and character of Jessica's gain or loss from the distribution?
A. $12,000 ordinary income.
B. $0.
C. $12,000 capital loss.
D. $12,000 capital gain.
Answer: D
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