George Received a Fully Vested 10% Interest in Partnership Capital

question 60

True/False

George received a fully vested 10% interest in partnership capital and a 20% interest in future partnership profits in exchange for services rendered to the GHP, LLC (not a publicly traded partnership interest). The future profits of the partnership are subject to normal operating risks. George will report ordinary income equal to the fair market value of the profits interest, but the capital interest will not be currently taxed to him.

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Definitions:

Loyalists' Exile

Loyalists' Exile denotes the period following the American Revolution where individuals loyal to the British crown, known as Loyalists, were forced to flee the newly independent United States, many resettling in Canada, Britain, or the British Caribbean.

Loyalist Exiles

Individuals who were loyal to the British Crown during the American Revolutionary War and who fled to other territories as a result of their allegiance.

Free Americans

Individuals in the United States who enjoy the freedoms and rights guaranteed by the Constitution and laws, without being subjected to slavery or involuntary servitude.

Loyal

Exhibiting strong allegiance or fidelity to a person, cause, or organization.