On March 17, 2016, Packer became a partner in Cats & Dogs Co., an already formed partnership. Packer does not have property to contribute and thus contributes services in exchange for his 5% interest in Cats & Dogs. Cats & Dogs’s net assets are as follows (including the value of Packer’s services received by the partnership):

On Packer’s 2016 tax return, what amount must Packer include as ordinary income from the receipt of the partnership interest?

a. $0
b. $7,500
c. $8,500
d. $8,750