Which of the Following Would Be Currently Taxable as Ordinary

question 176

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 that 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 if the partner remains in the partnership for three 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 when there are no restrictions on transferability of the interest.
• D) A 30% interest in the capital of the partnership when the partner contributes intangible property with a $0 basis that the partner developed.
• E) All of these.

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Definitions:

Comparative Advantage

The ability of an individual or group to carry out a particular economic activity (like producing a good or service) more efficiently than another activity.

Rice and T-shirts

Representative commodities in discussions of global trade and economy, illustrating basic needs (food) and global manufacturing (apparel).

Absolute Advantage

A condition where a country, individual, or firm can produce a good or service at a lower cost and more efficiently than others.

Computer Components

The physical parts or elements of a computer system, such as the central processing unit (CPU), memory (RAM), storage devices, and peripherals, which work together to perform computing tasks.