F is a partner in an investment partnership. She receives a payment equal to 10% of the partnership’s income in exchange for advising services rendered to the partnership. In the current year, the partnership had income of $1,000,000, of which the first $100,000 was paid to F in exchange for her advising services. This payment is treated as received by F for her advising services, and is not received in her capacity as a partner. Assume that all $1,000,000 of the partnership’s income was properly characterized as net long-term capital gain. How should F characterize the income from the $100,000 payment on her individual tax return?
a. As long-term capital gain.
b. As compensation income.
c. As a return of capital.
d. As 90% long-term capital gain, and 10% compensation income.