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all right so the last topic of this discussion is going back to section 721 the general rule of non-recognition of gain or loss when a partner contributes property right thats has that has a inherent gain or loss in there right remember its gain or loss a proper it had to be property but what if you have services if you have services that rule does not apply that general rule not recognition now if you do have services if you are if you are partners contributing services in exchange for an interest you have to distinguish between a capital and profits interest so first i want to before i give you the rules the distinction i want to distinguish what they are economically a profit a profits interest just means that you do not have any capital when you receive the interest or ever so if theres a hypothetical immediate liquidation a profits interest holder gets nothing because theres no liquidation value versus a capital interest is the opposite of that you actually have a capital bal