Kathy Purchases a One-Third Interest in the KDP Partnership from Paul

Kathy purchases a one-third interest in the KDP Partnership from Paul for $60,000. Just prior to the sale, Paul's outside and inside bases in KDP are $48,000. KDP's balance sheet includes the following: $$\begin{array} { | l | r | r | } \hline & \text { Basis } & \text { Fair Market Value } \\\hline \text { Cash } & \$ 45,000 & \$ 45,000 \\\text { Land held tor investment } & \$ 45,000 & \$ 90,000 \\\hline\end{array}$$ $$\begin{array} { | l | r | r | } \hline & \text { Basis } & \text { FMV } \\\hline \text { Cash } & \$ 27,000 & \$ 27,000 \\\hline \text { Accounts receivable } & - 0 - & 18,000 \\\hline \text { Imventory } & 103,500 & 121,500 \\\text { Equipment } & 270,000 & 337,500 \\\hline \text { Stock investment } & 67,500 & 62,500 \\\hline \text { Total } & \$ 468,000 & \$ 566,500 \\\hline\end{array}$$ If KDP has a §754 election in place, what is Kathy's special basis adjustment?

A) $0
B) $36,000
C) $12,000
D) None of these is correct.