On March 17, 20X4, 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' net assets are as follows:

	Basis	Fair Market Value
January 1, 20X4	$150,000	$150,000
March 17, 20X4	150,000	170,000
December 31, 20X4	150,000	175,000

On Packer's 20X4 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