At partnership inception, Black acquires a 50% interest in Decorators Partnership by contributing property with an adjusted basis of $250,000. Black recognizes a gain if
I. The fair market value of the contributed property exceeds its adjusted basis.
II. The property is encumbered by a mortgage with a balance of $100,000.
a. I only.
b. II only.
c. Both I and II.
d. Neither I nor II.
Answer: D
Tax
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