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A and B form AB partnership in January 2023. As part of the formation transaction...

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Accounting

A and B form AB partnership in January 2023. As part of the formation transaction (i) A transfers Property 1, having a value of $100 and a tax basis of $20, to AB partnership and (ii) B transfers Property 2, having a value of $150 and a tax basis of $50, to AB partnership. Property 2 is encumbered by a $50 liability; B transfers Property 2 to AB partnership subject to, and AB partnership assumes, the $50 liability. AB partnership expects to make monthly cash distributions to each of A and B beginning in January 2024. Could the disguised sale of property rules apply in this fact pattern?

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