Partner Z sells their 30% interest in a partnership for ,000 cash. Z's outside basis was ,000. The partnership has no liabilities but has 'Hot Assets' (Unrealized Receivables) of ,000. What is the character of Z's gain?

Under Section 751, the amount of money received attributable to unrealized receivables or substantially appreciated inventory ('Hot Assets') results in ordinary income. Z's share of receivables is ,000 (30% * ,000). Total gain is ,000. ,000 is ordinary, ,000 is capital.