Amari, Bryce and Colton were $$best friends forever$$ and decided to open their dream restaurant together. On $7/1/2023,$ Colton contributed kitchen equipment $($that he purchased three years ago$)$ with a fair market value of $$8,000$ and tax basis of $$4,000$ to the ABC partnership for a $1/3$ interest. Following a $$scene$$ at a New Year$$s Eve party, the best friends had a falling out and decided to split ways. On $1/1/2024,$ ABC distributed $$6,000$ of cash to Colton in order to reduce his interest to $10\%$ and make him a $$silent$$ partner. At the time of the distribution, Colton$$s outside tax basis was $$4,000.$

Which of the following best describes the $$6,000$ cash distribution to Colton:

Group of answer choices

Colton will not have disguised sales proceeds because he qualifies for the pre$-$formation expenditure exception.

Colton will not have disguised sales proceeds because the distribution was not anticipated at the time Colton contributed the property.

Colton will not recognize any gain on the distribution.

Colton will have disguised sales proceeds because the distribution occurred within two years of the contribution of the property.