Which, if either, of the following statements is or are true?

I. On the formation of a partnership, the contribution by one partner of encumbered property to a partnership when other partners contribute only cash will not result in taxation unless the total amount of the debt relief (which in this case equals the net debt relief) exceeds the contributors basis in the partners partnership interest.

II. The contribution of accounts receivable to a partnership results in immediate taxation to the contributor to the extent of the fair market value of the receivables on date of contribution.

a. I only.

b. II only.

c. Both I and II.

d. Neither I nor II.

PLEASE EXPLAIN!