Identify which of the following statements is true.
A)The contribution of Sec. 1245 property to a partnership triggers recognition of ordinary income by the contributor at the time of the transfer.
B)A partner may not recognize ordinary income when receiving a capital and profits interest in a partnership in exchange for services.
C)When a partnership interest is given to a partner in exchange for services, the partnership can deduct or capitalize the FMV of the services, depending on the nature of the services.
D)All of the above are false.

Question

Quizplus · Accepted Answer

When a partnership interest is given to a partner in exchange for services, the partnership can either deduct or capitalize the FMV of the services, depending on whether the services are of a capital nature or ordinary business expense.

Identify Which of the Following Statements Is True