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
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.

Required:
a. What are the hot assets for this sale?
b. What is the character of Marco’s gain or loss?