Jack and Jill form a general partnership. Jack contributes a building with a fair market value of$ 600,000 and a tax basis of$700,000 for a 60% capital and profits interest in the partnership. Jill performs services with a value of$400,000 and receives a 40% capital and profits interest in the partnership. What amount of gain, loss or income must each partner recognize on the transaction?

A.

Jack recognizes a$100,000 loss, Jill recognizes$ 400,000 of ordinary income.

B.

Neither Jack nor Jill recognize any income or loss.

C.

Jack recognizes$100,000 loss, Jill recognizes no incomeor loss .

D.

Jack recognizes no gain or loss, Jill recognizes$400,000 of ordinary income.