What type of capital gain does Donald recognize from POD Partnership earnings?

Donald recognizes $3,000 of long-term capital gains because these gains pertain to the profits generated from the partnership's earnings where he holds his interest for more than one year. Long-term capital gains generally occur when assets are held for more than a year and typically benefit from lower tax rates compared to short-term gains.

In this context, the POD Partnership's earnings likely represent assets held by the partnership over a longer period, thus qualifying their distribution to Donald as long-term capital gains. Given the specific dollar amount of $3,000, it suggests that this is the gain amount that Donald is set to recognize for tax purposes, reflecting not only the nature of the holding period but also the specific income he is reporting.

Other potential options suggest either a misunderstanding of capital gains treatment, such as associating them incorrectly with partnership revenue without regards to holding periods or tax implications. The recognition of long-term capital gain aligns with the favorable tax treatment typically afforded to those earnings, thus providing a beneficial outcome for Donald.