Karl arranges financing for a limited partnership to purchase real estate in exchange for a 50% interest in partnership profits. Two weeks later, Karl sells the profits interest for $30,000. In this tax year, Karl must recognize

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When Karl sold his profits interest, it is considered as ordinary income, so Karl must recognize $30,000 as ordinary income in the tax year. A is incorrect because it is not a short-term capital gain. B is incorrect because it is not a Sec. 1231 gain. D is incorrect because there is a gain that should be recognized.

Karl Arranges Financing for a Limited Partnership to Purchase Real