Sam is a 1% partner is Big Venture LLC. In 20x1, he performs services as a general contractor in the construction of a building for Big Venture. He normally charges $50,000 for this service. Instead, the partnership agrees to allocate the first $50,000 of its income to Sam on his K-1 (plus his usual 1% share of income) and then distribute the $50,000 to Sam in cash. Big Venture is extremely profitable and will certainly have well over $50,000 in income in 20x1. This situation might be treated as: Sam is a 1% partner is Big Venture LLC. In 20x1, he performs services as a general contractor in the construction of a building for Big Venture. He normally charges $50,000 for this service. Instead, the partnership agrees to allocate the first $50,000 of its income to Sam on his K-1 (plus his usual 1% share of income) and then distribute the $50,000 to Sam in cash. Big Venture is extremely profitable and will certainly have well over $50,000 in income in 20x1. 

This situation might be treated as: 

A. A disguised sale under Section 707(a)(2)(B) 

B. A disguised stranger payment under Section 707(a)(2)(A) 

C. A mixing bowl transaction under