Final answer:
The right of offset for disallowed losses on related-party transactions belongs to the related party who received the property. This is established under tax law, which is separate from the Coase Theorem that focuses on the definition and importance of property rights.
Step-by-step explanation:
The question addresses the issue of disallowed losses on related-party transactions which falls under tax law and regulations. Specifically, the right of offset refers to whether a party can claim a tax benefit from a loss when the transaction is between parties that are related to one another. According to tax rules, if a taxpayer sells property to a related party at a loss, that loss is not immediately deductible by the selling party. If the related party who received the property subsequently sells it to an unrelated third party, they can only recognize a gain to the extent that the loss was disallowed to the prior seller. Thus, the answer is B) The related party who received the property.
In context with the Coase Theorem, which explores how property rights determine the allocation of resources and resolution of conflicts, it indicates that clearly defining legal rights is essential for effective negotiation and resolution in scenarios involving potential externalities such as fire risk from a railroad. However, the Coase Theorem does not directly impact the tax laws regarding related-party transaction losses.