If Bonnie had held the land as an investment instead of inventory before contributing it to the partnership, and the partnership also treated it as an investment, then any gain or loss from the sale of the land would be characterized based on the holding period. If held for more than one year, it would be a long-term capital gain or loss. If held for less than one year, it would be a short-term capital gain or loss. However, since the land was sold at a loss and the basis was Bonnie's adjusted basis at the time of contribution, the loss would still be $296,000, but its character would be a capital loss (long-term or short-term depending on the holding period)