Section 721 Provides That No Gain or Loss Is Recognized

question 31

True/False

Section 721 provides that no gain or loss is recognized on contribution of property to a partnership in exchange for an interest in the partnership. A disguised sale is an exception to nonrecognition of gain or loss under § 721.

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Definitions:

Common Stock

Common Stock represents ownership in a corporation, giving shareholders voting rights and a share in the company's profits via dividends.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock and often pays dividends at a fixed rate.

Bondholders

Individuals or entities that hold debt securities issued by governments or corporations, entitling them to receive a fixed or variable interest payments and the return of the principal upon maturity.

Disposable Income

Post-tax financial resources available for household spending and savings.