Bud Has Devoted His Life to His Business, the BK

question 63

Essay

Bud has devoted his life to his business, the BK Partnership, in which he owns an 85% capital and profits interest. Because he has worked so hard all his life, he never married and has no children. He has decided to give a 25% capital and profits interest to Berry, a close friend, if Berry will work in the business for five years. Berry will receive guaranteed payments for his work. Bud devotes all his time to the partnership, but he takes no salary. What tax issues should Bud and Berry consider with respect to the gift of the partnership interest and Bud's employment arrangement with the partnership?

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Definitions:

Cognitive Advantage

The superiority in certain mental abilities, such as memory, problem-solving, and language, over others.

Language

A system of spoken, written, or gestural symbols used for communication and expression among humans.

Intelligence B

Hebb’s term for observed intelligence, influenced by experience and other factors in the course of development; measured by intelligence tests.

Parietal Association Cortex

Part of the parietal lobe that integrates sensory information from different modalities, particularly determining spatial sense and navigation.