Mr. Jamail transferred business personalty (FMV $187,000; adjusted tax basis $29,900) to J&K Partnership in exchange for a partnership interest. Which of the following statements is true?
A. If Mr. Jamail owns a 14% partnership interest immediately after the exchange, his tax basis in the interest is $187,000.
B. If Mr. Jamail owns a 14% partnership interest immediately after the exchange, he must recognize a $157,100 gain.
C. If Mr. Jamail owns 34% partnership interest immediately after the exchange, he recognizes no gain on the exchange.
D. Statements A and C are true.
Answer: C
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