Federal Income Tax - Diamond v. Commissioner (T.C. 1970). It is well established that an interest in partnership capital received as compensation for personal services is taxable income to the recipient in the year in which the capital right is transferred. It had been generally accepted that an interest in future partnership profits and losses was not taxable in the year of receipt. The Tax Court in Diamond v. Commissioner, however, determined that income is realized upon receipt of an interest in future partnership profits and losses when such an interest is compensation for services already rendered.
S. F. Poucher,
Income Regulation of Future Interests in Partnerships Porfits and Losses--Taxation-Federal Income Tax--Diamond v. Commissioner,
San Diego L. Rev.
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