I am having a really hard time figuring out how to get the gains because i dont know if i should consider the FMV. I read in the IRC that is only the adjusted basis but i need to confirm

A new client comes to you and tells you that he owns an LLC 100%. He has been reporting all of the activity on this wholly owned LLC on a Schedule C on his personal return. He is a cash basis taxpayer. He has been approached by someone who is interested in partnering with him and buying a 40% interest in the LLC. The person is willing to pay $400,000 for the 40% interest. The assets and liabilities of the LLC are as follows:

Tax Basis FMV

Cash $50,000 $50,000

Accounts Receivables $ 0 $200,000

Inventory 250,000 $350,000

Fixed assets Gross 200,000

Accumulated Depreciation (100,000)

Net fixed assets $100,000 $150,000

Total Assets $400,000 $750,000

Liabilities non-recourse $50,000 $50,000

Net equity $350,000 $700,000

Total Liabilities & Equity $400,000 $750,000

What are the tax implications to your client on selling 40% of his interest in the LLC to another person? Is there gain or loss? Is it capital gain (loss) or ordinary gain (loss)?