Adams owns a John Deere distributorship. Upon the advice of his accountant he enters into a partnership with Smith to acquire land which Smith will then farm. In addition to contributing cash to the partnership Adams contributes farm equipment valued at $200,000 with and adjusted basis in his hands of $170,000. Three years later when the adjusted basis of the equipment is $140,000 and its FMV is $185,000, the partnership sells the equipment. What is the character of the gain on the sale of the equipment by the partnership?