Need help with my Writing question – I’m studying for my class.
1. 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.
2. Thanks for these comments. Just as a heads up, you need to do all 3 scenarios in your post, you don’t just pick one this week so please make sure to go back and add the missing ones to your post. Do you think partners are often surprised by owing tax on services for stock? Class?
3. Thanks for these comments here and talking about the rules especially in relations to services. Do we need to tax them as an employee and process withholdings or is similar to 1099 income? Class?
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