Which of the Following Would Be Currently Taxable as Ordinary

question 130

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 the capital of the partnership where the partner contributes intangible property with a $0 basis that the partner developed.
• E) All of the above.

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Definitions:

Water Purifier

A water purifier is a device that removes impurities and contaminants from water, making it safe for drinking and other uses.

Lease Expiry

The end of a lease agreement term, after which the lessee must vacate the property or negotiate a renewal of the lease.

Residential Tenancy

A legal agreement between a landlord and tenant for the rental of a living space, such as a house or apartment.

Absolute Right

A legal right that is complete and not contingent upon external conditions or restrictions.