J&J, LLC Was in Its Third Year of Operations When

question 65

Short Answer

J&J, LLC was in its third year of operations when J&J decided to expand the number of members from two, A & B, with equal profits and capital interests to three members, A, B, and C. The third member, C, will contribute her financial expertise to the LLC in exchange for a 1/3 capital interestin J&J. Given the balance sheet below reflecting the financial position of J&J on the date member C is admitted, what are the tax consequences to members A, B, and C, and to J&J when C receives her capitalinterest? If, instead, member C receives a 1/3 profit interest, what would be the tax consequences to membersA, B, and C, and to J&J?

---

Definitions:

Desynchronization

A state where natural biological rhythms, such as sleep patterns, become out of sync with environmental cues.

Alpha Waves

A type of brain wave detected by electroencephalography (EEG), associated with a state of relaxed alertness.

Eyes Closed

Refers to the state of having the eyelids shut, which can be voluntary or involuntary, affecting visual input and other sensory processing.

Beta Waves

A pattern of brain waves with a frequency of 13 to 30 Hz that are associated with active, alert, and focused states of consciousness.