Theta Partnership, a Calendar Year Taxpayer, Operates a Business in Which

Theta Partnership, a calendar year taxpayer, operates a business in which capital is a material income-producing factor.On January 1 of the current year, T, a 70 percent partner in Theta, sells half of his capital interest to his son S for its fair market value of $250,000.(This transfer gives S a 35 percent interest in partnership capital.) For the current year, Theta earns taxable income of $600,000.The maximum amount of this income that may be allocated to son S is

A) Any amount as long as the allocation has substantial economic effect per § 704(b)
B) $0
C) $210,000
D) $420,000