An architect performed services for Bill and Sue and, in lieu of her normal fee, accepted a 10 percent interest in a partnership with a fair market value of $10,000. How much income from this arrangement should the architect report on her income tax return?

a. The architect does not have any currently taxable income.

b. The architect has realized $10,000 in capital gains.

c. The architect must recognize $10,000 in compensation income.

d. The architect has realized $10,000 in compensation income, but does not have to recognize it until she sells her interest in the partnership.