Cloudeez LLC$,$ a limited liability company treated as a

partnership for tax purposes, is in the business of renting high$-$cost network

servers to private enterprises. Typically, it enters into a $15-$year contract with

a customer and then acquires the servers needed to fulfill that contract.

Cloudeez elects to depreciate the equipment for tax purposes on a straight$-$line

basis over five years. Looking to expand its business, Cloudeez attracts a

significant new equity investment from Bianca McCarthy by offering her a

special allocation of $99\%$ of the depreciation on the equipment financed by her

capital contribution, to be followed by a chargeback of an equal amount of

leasing income commencing at the end of the, depreciation period. Given the

nature of Cloudeez's business, this income chargeback is strongly lik,ely to

occur ratably over the last $10$ years of the $15-$year contract period. Assuming

these allocations have economic effect, is that effect substantial?

a$)$ Yes, because the value$-$equals$-$basis presumption applies

b$)$ Yes, because the five$-$year presumption applies

c$).$ No$,$ because neither presumption applies and the transitory test is

not satisfied

d$),$ No$,$ because the five$-$year presumption applies, but it does not cover

the overall$-$tax$-$effect test, which is not satisfied in this case