Section 721 provides that, in general, no gain or loss is recognized by the partnership or the partner on contribution of appreciated or depreciated property to a partnership in exchange for an interest in the partnership.

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Section 721 of the Internal Revenue Code generally provides that neither the partner nor the partnership recognizes gain or loss when property is contributed to the partnership in exchange for an interest in the partnership. This rule applies to both appreciated and depreciated property.

Section 721 Provides That, in General, No Gain or Loss