Which of the Following Would Be Currently Taxable as Ordinary

question 5

Multiple Choice

Which of the following would be currently taxable as ordinary income to the service partner if received in exchange for services performed for the partnership? (In all cases, assume the interest is not sold within two years after the time it is granted to the service partner.)

• A)A 10% interest in the capital of the partnership that will vest in 3 years.
• B)A 20% interest in the future profits of the partnership received in exchange for future services to be performed for the partnership.
• C)A 25% interest in the capital of the partnership where there are no restrictions on transferability of the interest.
• D)A 30% interest in ongoing profits of the partnership where the partnership is not a publicly-traded partnership and the income stream is not assured.
• E)All of the above.

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Definitions:

Alternative Explanations

Different reasons or theories provided to account for a phenomenon or observation.

Critical Thinking

The objective analysis and evaluation of an issue in order to form a judgment, often requiring skepticism and the questioning of assumptions.

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Socially constructed norms and beliefs about the behaviors and attributes considered appropriate for men and women in a given society.

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The degree to which a person's physical traits are considered aesthetically pleasing or beautiful by others.