[Anonymous]

Hi, I’m working on the following question in Ninja MCQ:

If property contributed to a partnership is distributed to a partner other than the contributing partner within seven years of its contribution to the partnership, all of the following will apply except:

A. the contributing partner will be required to recognize the built-in gain or loss at the time of the disqualified distribution.

B. gain or loss is calculated as if the property was sold for the lesser of its basis or FMV at the date of distribution.

C. the contributing partner’s gain recognized is limited to the gain that would be recognized by the partnership.

D. the basis in the property and partnership interests will be adjusted for the gain or loss recognized.

Answer: B

My question is, how come the answer is not A? I thought if a contributed property was distributed within 7 years, the contributing partner would have to recognize “pre-contribution gain”?