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An Individual Who Contributes Services in Exchange for an Unrestricted

question 42

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An individual who contributes services in exchange for an unrestricted capital interest in a partnership has includible ordinary income equal to the fair market value of the capital interest.


Definitions:

Interest Rate

The percentage charged by a lender to a borrower for the use of assets, typically expressed as an annual percentage of the principal.

Invest Today

The act of allocating resources, usually money, in the present with the expectation of receiving future returns or benefits.

Present Value

The value today of a future sum of money or cash flow sequence, discounted at a particular rate of return.

Equal Amount

A term indicating that two or more quantities are the same in value or measure.

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