Character of the reported profit

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Henry Hawkins owns 20 percent interest in the HI Partnership. On July 1 he sold 100 shares of stock of IPR Corporation to the partnership for $10,000, its fair market value. The stock had cost him $5,000 10 months prior to the sale.

Assume that the HI partnership in the preceding problem held the IPR stock for three months and on October 1 sold it for $15,000 to Isaac Stanley, the 80 percent partner and a real estate broker. How much profit must Henry Report on this partnership sale currently? What is the character of the reported profit? How would your answer be different he were a dealer in securities?

Reference no: EM13143953

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