35. Marco, Jaclyn, and Carrie formed Daxing Partnership (a calendar year-end entity) by contributing cash 10 years ago. Each partner owns an equal interest in the partnership and has an outside basis in his/her partnership interest of $104,000. On January 1 of the current year, Marco sells his partnership interest to Ryan for a cash payment of

$137,000. The partnership has the following assets and no liabilities as of the sale date:

Tax Basis FMV Cash $ 18,000 $ 18,000 Tax Basis FMV Accounts receivable 0 12,000 Inventory 69,000 81,000 Equipment 180,000 225,000 Stock investment 45,000 75,000 Totals $312,000 $411,000 The equipment was purchased for $240,000, and the partnership has taken $60,000 of depreciation. The stock was purchased seven years ago.

a. What are the hot assets [§751(a)] for this sale?

b. What is Marco’s gain or loss on the sale of his partnership interest?

c. What is the character of Marco’s gain or loss?

d. What are Ryan’s inside and outside bases in the partnership on the date of the sale?