Fred and Wilma Formed the Equally Owned FW Partnership Several

Fred and Wilma formed the equally owned FW partnership several years ago. On the last day of the prior tax year, they each transferred a 20% interest in the FW partnership a capital-intensive business) to their son, Rocky 40% total to Rocky; Fred and Wilma each retained 30% interests). For the current tax year, FW reported income of
$200,000. Fred provides services to the partnership valued at $60,000; Wilma and Rocky provide no services. The
$200,000 of income will be allocated $102,000 to Fred, $56,000 to Rocky, and $42,000 to Wilma.