Scott Provides Accounting Services Worth $40,000 to the ABC Partnership

Multiple Choice

Scott provides accounting services worth $40,000 to the ABC Partnership in exchange for a 20% interest in the capital and profits of the partnership.The tax result to Scott is

A) a partnership interest with a zero basis and no gain or loss.
B) a partnership interest with a zero basis and $40,000 of ordinary income.
C) a partnership interest with a $40,000 basis and $40,000 capital gain.
D) a partnership interest with a $40,000 basis and $40,000 ordinary income.