On July 1 of the Current Year,Ambrose Was Admitted to the Partnership

On July 1 of the current year,Ambrose was admitted to the partnership of Ambrose and Nectar.His contribution to capital consisted of 500 shares of stock in Paniculata Corporation,which he bought in 2010 for $10,000 and which had a fair market value of $50,000 on July 1 of the current year.Ambrose's interest in the partnership's capital and profits is 25 percent.On July 1 of the current year,the fair market value of the partnership's net assets (after Ambrose was admitted) was $200,000.What is Ambrose's taxable gain in the current year on the exchange of stock for his partnership interest?

A) $0 gain or loss
B) $40,000 ordinary income
C) $40,000 long-term capital gain
D) $40,000 Section 1231 gain
E) None of the above