Question

Sweeney originally contributed $178,000 in cash for a one-fourth interest in the Gilbert LLC. During the several years that Sweeney was a member of the LLC, his share of the LLC's income was $106,800 and he withdrew $71,200 cash. The LLC's liabilities are $89,000, of which Sweeney's share is $22,250. The LLC has $44,500 of hot assets, of which Sweeney's share is $11,125. Sweeney sells his LLC interest to Jana for $234,960 cash, with Jana also assuming Sweeney's share of the LLC's liabilities.

Question 1:

Sweeney's total gain on the sale is $21,360, of which $________ recognized as ordinary income, with the remaining $_______ recognized as a long-term capital gain.

Answer 1