Stephen is admitted to the HHH Partnership on January 1 of the current year in return for his services managing the partnerships business during the year. The HHH partnership reports ordinary income of $200,000 for the current year.

What are the tax consequences to Stephen and to the HHH partnership if Stephen receives a 30% interest in the partnership with an $80,000 FMV.

What are the tax consequences if Stephen contributes qualifying property to the HHH partnership in addition to his professional services?