Marco, Jaclyn, and Carrie formed Daxing partnership (a calendar year-end entity) by contributing cash 10 years ago. Each partner owns an equal interest in the partnership. Marco, Jaclyn, and Carrie each have an outside basis in his/her partnership interest of $104,000. On January 1 of the current year, Marco sells his partnership interest to Ryan for a cash payment of $137,000. The partnership has the following assets and no liabilities as of the sale date:

.................................................Tax Basis.................Fair Market Value

Cash$............................................18,000................................$ 18,000

Accounts receivable............................-0-..................................12,000

Inventory.......................................69,000..................................81,000

Equipment................................180,000.................................225,000

Stock investment.......................45,000...................................75,000

Totals.....................................$ 312,000..............................$ 411,000

The equipment was purchased for $240,000 and the partnership has taken $60,000 of depreciation. The stock was purchased 7 years ago.

a. What are the "hot assets" (§751(a)) for this sale?

b. What is Marco's gain or loss on the sale of his partnership interest?

c. What is the character of Marco's gain or loss?

d. What is Ryan's inside and outside bases in the partnership on the date of the sale?