Which of the following statements about partnerships is true?

Question

Quizplus · Accepted Answer

A partner's initial basis in a partnership interest is equal to the basis of the property transferred (plus cash contributed) to the partnership, adjusted for any gain recognized on the transfer and reduced for liabilities assumed by the other partners. This is because the partner's initial investment in the partnership includes both property and cash, and the partner's basis in the property transferred is carried over to their basis in the partnership interest. The other statements are incorrect. Partnerships can choose a fiscal year end instead of a calendar year end (A); gain or loss is recognized on transactions between partners and a partnership (B); a partner may recognize gain on a contribution of property to a partnership if the partner's share of the partnership's liabilities is less than the adjusted basis of the contributed property (C); and the partnership's basis in property contributed by a partner is equal to the adjusted basis of the property at the time of transfer (E).

Which of the Following Statements About Partnerships Is True