Partner E Is Retiring from the EFGH Partnership

Partner E is retiring from the EFGH Partnership.The partnership agreement provides that E will be paid $64,000 for his 15% net interest in partnership property (excluding goodwill) plus an additional $36,000 retirement bonus.In addition, E will be immediately relieved of any personal liability for partnership debts.The $100,000 cash will be paid to E in 10 annual $10,000 installments, beginning in the current year.Immediately prior to his retirement, E's outside basis in his partnership interest is $28,000; this basis includes $20,000 of EFGH's debt.In the current year, E will:

A) Recognize ordinary income of $9,000 and no capital gain.
B) Recognize ordinary income of $3,600 and no capital gain.
C) Recognize capital gain of $2,000.
D) Recognize ordinary income of $3,600 and capital gain of $6,400.
E) Recognize ordinary income of $9,000 and capital gain of $21,000.