Identify which of the following statements is true.

A) A contribution of services for a partnership interest is a tax-free transaction.

B) For Federal income tax purposes, formation of a partnership is governed by Sec. 721.

C) When a partnership assumes a liability on property contributed by a partner, the only effect on the contributing partner's basis in his or her partnership interest is that his or her basis will be increased by the amount of the liability assumed by the other partners.

D) All are false.