Sari transferred an office building with a $500,000 FMV and a $300,000 adjusted basis to the Oak Partnership in exchange for a one-quarter ownership interest.Sari had acquired the building three years earlier and had used it in her sole proprietorship.Sari's holding period for her partnership interest
A)will begin the day after she acquires the partnership interest.
B)will include the holding period of the transferred building.
C)will depend on the election she files.
D)none of the above.

Question

Quizplus · Accepted Answer

According to the rules of Section 723 of the Internal Revenue Code, when property is transferred to a partnership in exchange for a partnership interest, the partner's holding period in the partnership interest includes the holding period of the transferred property. Therefore, Sari's holding period for her partnership interest will include the three-year holding period for the building, and will begin on the same day she acquired the building.

Sari Transferred an Office Building with a $500,000 FMV and a $300,000