At the End of Last Year, Cynthia, a 20% Partner

At the end of last year, Cynthia, a 20% partner in the five-person CYG partnership, has an outside basis of $30,000 including her $15,000 share of CYG debt. On January 1 of the current year, Cynthia sells her partnership interest to Roger for a cash payment of $22,500 and the assumption of her share of CYG's debt. CYG has no hot assets. What is the amount and character of Cynthia's recognized gain or loss on the sale?

A) $7,500 capital loss.
B) $7,500 ordinary loss.
C) $7,500 capital gain.
D) $7,500 ordinary incomE.Cynthia's gain is the difference between the amount realized ($22,500 cash plus $15,000 debt relief) and her outside basis ($30,000) for a $7,500 gain.The gain is capital because CYG has no hot assets.