Rose contributes farm machinery with a $170,000 FMV, a $155,000 basis, and a $30,000 note owed to the AB Bank to a new partnership in exchange for a 35% partnership interest. Total partnership liabilities after Rose's contribution are $290,000. Under these circumstances, no gain or loss was recognized. The partnership's basis in the machinery is $155,000 and its holding period includes Rose's holding period for the property. Rose's basis in her partnership interest is $226.500 Read the requirement. O A. The answers would not change. The rules relating to gain or loss on property contributions and the calculation of basis are the same for S corporations and partnerships. O B. No gain or loss is recognized. Rose's basis in her S corporation stock is $125,000 C. The gain or loss of all the property contributions is totaled and then split equally among all of the owners. Rose's basis in her S corporation stock would be calculated by adding the FMV of all the property O D. Rose recognizes a $15,000 gain on the property contribution. Rose's basis in her S corporation stock is $125,000. contributed and multiplying this amount by her 35% stock interest. Requirement Now assume the entity is a new corporation with all owners making property contributions. The corporation makes a timely election to be treated as an S corporation beginning with its first year. What gain or loss is recognized on the property contribution to the corporation? What is Sally's basis in the corporation? Print Done