Reggie contributed $16,000 in cash and a capital asset he had held for three years with a fair market value of $32,000 and tax basis of $8,000 for a 5 percent capital and profits interest in Green Valley LLC.

If Reggie sells his LLC interest two months later for $48,000 when the tax basis in his LLC is still $24,000, how much gain does he report and what is its character? {Hint: See Reg. 1.1223-3}