When property is contributed to a partnership for a capital and profits interest,the holding period of the contributing partner's interest:
A)May include the holding period of the contributed property.
B)Always starts the day after the contribution date.
C)Always starts the day the property was contributed.
D)Never includes the holding period of the contributed property.
E)None of the above.

Question

Quizplus · Accepted Answer

The holding period of the contributing partner's interest may include the holding period of the contributed property. This is in accordance with the tax rules that allow partners to carry over the holding period of contributed property to their partnership interest. As a result, the partner can qualify for long-term capital gains treatment on their share of the partnership's income.

When Property Is Contributed to a Partnership for a Capital