Thank you for laying out the factors to consider! To clarify, the equity was given as compensations for service rendered, so no capital was contributed to "purchase" the equity. So I don't think Revenue Ruling 99-5 is relavent in this case.
I need to research on Section 754 election and Section 704(c) allocation. If I simplify how this equity should be reflected on my tax forms, is it going to be reported as "Guaranteed payment to partners" on K-1s? This isn't a payment in cash form, so I wonder how I shall make sure the equity % is shown on the tax forms, which will be my tax basis for furture capital gain calculation if I were to sell the interests.
