C is offered a capital interest in a partnership whose sole asset is a commercial building with a fair market value of $150,000 and an adjusted basis of $90,000. The building has been depreciated on the straight line method. A and B have $45,000 outside bases in their respective partnership interests. C has performed real estate management services for the partnership over the past year and has agreed to perform additional services in the future.

(a) What are the tax consequences to C and to the partnership (i.e., A and B) if in year one C receives a 10% capital interest in the partnership as compensation for his management services over the past year?

(b) What result in (a), above, if C receives his capital interest in exchange for legal services performed in connection with the acquisition of the building?

(c) What result in (a), above, if C receives his interest as compensation for services to be rendered, however that if C ceases to render services before the end of the year three, C or any transferee of C must relinquish his interest in the partnership. Assume for this problem that the building will have a value of $450,000 and an adjusted basis of $90,000 at the end of year three.

(d) What result in (a), above, if C is promised that if he renders services until the end of year three, the partnership interest will be transferred to him at that time? Again, assume that the building will have a value of $450,000 and an adjusted basis of $90,000 at the end of year three.