On July 7, 2021, Tammy contributed furniture (which was held as inventory) worth $10,000 with a basis of $5,000 to FNL Partnership in exchange for a 50% interest. Tammy purchased the furniture on August 8, 2018. Tammy also contributed $10,000 of a non-recourse debt.

Assume FNL uses the furniture in its business for four years and then sells the furniture for $8,000. What is the amount and character of any gain or loss?

Now assume FNL uses the furniture in its business for six years and then sells the furniture for $8,000. What is the amount and character of any gain or loss?