Partner renders services worth $10,000 to Partnership in which he is a partner. Without regard to Partner's services, Partnership has $75,000 of ordinary income and $25,000 of long-term capital gain for the year. Both Partner and Partnership are calendar year taxpayers, but Partner uses the cash method of accounting and Partnership uses the accrual method. Partnership does not make a payment to Partner during the year, but where permitted it accrues the expense, which is currently deductible under Section 162. Determine the tax consequences of the following alternative transactions to Partner and Partnership:

(A)In recognition of his services, Partner is allocated the first $10,000 of partnership profits, which is treated as part of his distributive share.

(B) Section 707(a)(1) applies because the services are unrelated to the everyday conduct of Partnership's activities and are not continuous. See 267(a)(2) and (e).

(C) Section 707(c) applies because the services are ongoing services related to Partnership's activities but are paid without regard to Partnership income.

(D) Partner is allocated $10,000, which is treated under 707(a)(2)(A) as a 707(a)(1) payment.