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This would be a "capitol gain" based on the "basis" of the original gift.
TO determine tax liability, you first look to the basis. Basis is the value of the gift when he received it (back in 87). Then you look to what he received for the sale. The difference is the taxable amount.
So, in his case, if he will receive $15K for the sale? YOu need to determine the value when he received it back in '87. You subtract that amount from the $15K and you will see the gain.
Example: Say his portion was worth $5K in '87. Then the taxable amount would be $10K ($15K - $5K). So he would pay a long term capitol gain on this amount.
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