Sweeney originally contributed $175,000 in cash for a one-fourth interest in the Gilbert LLC. During the several years that Sweeney was a member of the LLC, his share of the LLCs income was $90,000 and he withdrew $75,000 cash. The LLCs liabilities are $80,000, of which Sweeneys share is $20,000. The LLC has $40,000 of hot assets, of which Sweeneys share is $10,000.

a. Sweeney sells his LLC interest to Jana for $225,000 cash, with Jana also assuming Sweeneys share of the LLCs liabilities.

b. How much is Sweeneys gain on the sale, and what is its character? How much is Janas adjusted basis for her LLC interest?