3. Duffy Associates is a partnership engaged in real estate development. Olinto, a civil engineer, billed Duffy $40,000 in the current year for consulting services rendered.

In full settlement of this invoice, Olinto accepted a $15,000 cash payment plus the following.

Fair Market Value Carrying Amount on Duffy’s Books 10% partnership interest in Duffy $10,000 N/A Automobile 7,000 $3,000 What amount should Olinto, a cash basis taxpayer, report in his current-year return as income for the services rendered to Duffy?

a. $15,000

b. $28,000

c. $32,000

d. $40,000