Sterling is a college professor with an extensive stock portfolio. Last year, he met Wheeler, a stockbroker with the firm of Ransom, LaForge, and Adkins. To get Sterling's business, Wheeler offered to use his investment expertise on Sterling's behalf, for which he would receive 1/4 of any profits and would also assume 1/4 of any losses if Sterling would give Wheeler $300,000 to invest. Sterling accepted Wheeler's offer. During 2015, Wheeler makes a net profit of $120,000 on trades with Sterling's money. On January 31, 2016, Sterling pays Wheeler $30,000 per their agreement. In addition, Sterling pays normal brokerage commissions on the purchases and sales that Wheeler executes in making the $120,000 net profit on the $300,000 investment. The commissions are properly included in the calculation of the net profit. Sterling would like to know the proper tax treatment of the $30,000 payment to Wheeler.