Problem: Under each of the following scenarios, discuss the different tax treatments of an incoming partner who purchases an interest by agreeing to perform services for the partnership. In return for services, the partnership
- gives a 25% interest in the capital of the partnership;
- gives a 25% interest in the future income of the partnership; or
- gives a 25% interest in the partnership's future income that the incoming partner must forfeit if the partnership, as reconstituted after the incoming partner's admission, is unable to earn an average of $100,000 profit for the ensuing 5 years.