Ozone Partnership constructed an office building which has a projected annual income of $100,000 for several years. Archie Edwards, the architect for the building, whose normal fee is $50,000, contributes cash for a 25 percent interest in the partnership. The partnership agreement provides Archie will receive (1) 25 percent of the earnings from the partnership and (2) an allocation and distribution of

$25,000 of partnership gross income for its first two years of operation after the building is fully leased. The leasing prospects and cash flow projections are excellent. Assuming the annual gross income for the first two years is

$100,000 in each year and that depreciation and cash expense items, exclusive of Archie's arrangement, total $60,000, compute the effect of the above items on the income of the partnership and of Archie. Indicate how the income would be classified.