Which of the Following Statements Regarding a Partner's Basis of Inventory

Which of the following statements regarding a partner's basis of inventory received in a liquidating distribution is true?

A) Partners may either increase or decrease the basis in inventory distributed in a liquidating distribution.
B) Partners may only increase the basis in inventory distributed in a liquidating distribution.
C) Partners may only decrease the basis in inventory distributed in a liquidating distribution.
D) None of these statements is truE.A partner may not increase the basis of inventory received in a liquidating distribution because she would essentially be converting a capital loss into an ordinary loss.