Section 721 Provides That No Gain or Loss Is Recognized

question 71

True/False

Section 721 provides that no gain or loss is recognized on a contribution of property to a partnership in exchange for an interest in the partnership. An exception might apply if the taxpayer receives a cash distribution from the partnership soon after the property contribution is made.

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Definitions:

Innocent Partner

A member of a partnership who is not aware of any wrongful behavior or fraudulent activity committed by their partner(s) within the business operations.

Limited Liability Partnership

A Limited Liability Partnership (LLP) is a partnership in which some or all partners have limited liabilities, blending elements of partnerships and corporations.

Ordinary Debts

Financial obligations or liabilities that arise in the course of normal business operations, excluding special or secured debts.

Legal Position

An individual's or entity's status or stance on a particular legal issue, based on rights, duties, and liabilities under the law.