A (a cash method taxpayer) is an equal partner in the ABCD partnership (an accrual method taxpayer) and has a $10,000 outside basis in her partnership interest. A owns depreciable personal property (fair market value -- $15,000; fair rental value -- $1,000 per year) which the partnership will use in its business. Before any of the transactions described below, the partnership has $10,000 of net income each year. What result in the following alternatives?

(a) A leases the property to the partnership for 3 years. The partnership will pay A $1,000 per year for 3 years for the use of the property.

(b) What result in (a), above, if the rental payments are made on January 31 of the year following accrual?

(c) A transfers the property to the partnership, which will use it for 3 years and transfer it back to A at the end of that period. The partnership makes a special allocation of its first $1,000 of net income to A. What result to A? What if, instead, the first $3,000 of the first years net income and no subsequent income in excess of her one-quarter share is allocated to A?