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gain recognized to Pecaris to any amount less than the gain
realized that we have already determined. Having rejected
petitioner's argument that Pecaris distributed to petitioner a
25-percent undivided interest in the Mall, which he then
contributed to Coastal in exchange for his partnership interest,
we nevertheless observe that the creation of the partnership
interest issued by Coastal to petitioner appears to have been an
element of the consideration given and received by Pecaris.
Petitioner so structured the transfer of the Mall to Coastal that
the shortfall in the cash consideration was ultimately satisfied
by his receipt of a 90-percent partnership interest in Coastal.
We therefore ask whether section 721, providing for
nonrecognition of gain or loss on a contribution of appreciated
property to a partnership, causes any portion of the gain
realized by Pecaris to be entitled to nonrecognition. In
particular, did the Mall transaction amount to a transfer of the
Mall by Pecaris to Coastal in exchange for cash and a partnership
interest in Coastal having a value of $700,000, which Pecaris
then distributed to petitioner, plus $95,683 in cash, with
disproportionately greater amounts of cash being distributed to
petitioner's partners in Pecaris?
It seems that a transfer of appreciated property to a
partnership in exchange for a partnership interest and cash can
be treated in at least three different ways: (a) Part-sale part-
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