If a partnership interest is received in exchange for services rendered, ordinary income must be recognized by the recipient of the capital interest.

Name: If a partnership interest is received in exchange for services rendered, ordinary income must be recognized by the recipient of the capital interest.
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Quizplus · Accepted Answer

This is correct according to the IRS regulations. When there is an exchange of partnership interest for services rendered, the recipient of the capital interest needs to recognize ordinary income.

If a Partnership Interest Is Received in Exchange for Services