In X1, Adam and Jason Formed ABC, LLC, a Car

question 95

Multiple Choice

In X1, Adam and Jason formed ABC, LLC, a car dealership in Kansas City. In X2, Adam and Jason realized they needed an advertising expert to assist in their business. Thus, the two members offered Cory, a marketing expert, a 1/3 capital interest in their partnership for contributing his expert services. Cory agreed to this arrangement and received his capital interest in X2. If the value of the LLC's capital equals $180,000 when Cory receives his 1/3 capital interest, which of the following tax consequences does not occur in X2?

• A) Adam, Jason and Cory receive an ordinary deduction of $20,000 in X2.
• B) Cory reports $60,000 of ordinary income in X2, and Adam and Jason receive an ordinary deduction of $30,000 in X2.
• C) Cory reports $60,000 of ordinary income in X2.
• D) Adam and Jason receive an ordinary deduction of $30,000 in X2.

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Definitions:

Verbal Persuasion

The act of influencing or convincing others through spoken words, using logic, emotion, or authority.

Emotional Arousal

A condition where an individual experiences intense feelings or heightened emotional states, which can impact behavior and cognition.

Bandura

Refers to Albert Bandura, a psychologist known for his work on social learning theory, which emphasizes the role of observational learning, imitation, and modeling in behavior.

MBO (Management By Objectives)

A strategic management model that aims to improve the performance of an organization by clearly defining objectives that are agreed to by both management and employees.