In a full or partially liquidating distribution of a partner's interest involving Section 751 assets and Other Property, what is required if the partner does not receive a proportionate shares of Section 751 property and Other Property in the liquidating distribution?

1. The required procedure follows the normal liquidating distribution rules..

2. The required procedure results in a fully taxable exchange between the partnership and the partner.

3. The partnership and the partner are involved in a phantom taxable exchange of properties after the partner takes a "phantom distribution" of property from the partnership. Gains could be recognized by the partner and the partnership in this exchange.

4.A tax penalty is levied on the partnership