McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick

Exercise 4

Last December 31, Ramon sold the 10 percent interest in the Del Sol Partnership that he had held for two years to Garrett for $400,000. Prior to selling his interest, Ramon's basis in Del Sol was $200,000 which included a $100,000 share of nonrecourse debt allocated to him.
a. What is Garrett's tax basis in his partnership interest
b. If Garrett sells his partnership interests three months after receiving it and recognizes a gain, what is the character of his gain