Contribution of Services and Property. Marjorie works for a large firm whose bus

Question

Contribution of Services and Property. Marjorie works for a large firm whose business is to find suitable real estate, establish a limited partnership to purchase the property, and then sell the limited partnership interests. In the current year, Marjorie received a 5% limited partnership interest in the Eldorado Limited Partnership. Marjorie received this interest partially in payment for her services in selling partnership interests to others, but she also was required to contribute $5,000 in cash to the partnership. Similar limited partnership interests sold for $20,000 at approximately the same time that Marjorie received her interest. What are the tax consequences for Marjorie and the Eldorado Limited Partnership of Marjorie's receipt of the partnership interest?

Explanation / Answer

As Marjorie received a 5% limited Partnership interest in the Eldorado Limited Partnership, it may lead to taxable receipts in the hand of Majorie subject to receipts in terms of other than salary.

In the given problem Partnership interests sold for $20,000 at approximately the same time that Marjorie received her interest then this amount is subject to taxation as per the provision of the Income tax.

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