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

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The Answer is If member C received a one-third capital interest for her services, the following tax consequences would result:A is allocated a ${{[a(20)]:#,###}} expense, reducing A's FMV capital account to ${{[a(23)]:#,###}} and his tax basis capital account to ${{[a(22)]:#,###}}. His tax basis would include a one-third share of the LLC debt, or ${{[a(26)]:#,###}}.B is allocated a ${{[a(21)]:#,###}} expense, reducing B's FMV capital account to ${{[a(25)]:#,###}} and his tax basis capital account to ${{[a(24)]:#,###}}. His tax basis would include a one-third share of the LLC debt, or ${{[a(26)]:#,###}}.C reports ordinary income of ${{[a(19)]:#,###}} as a guaranteed payment for services provided. C's FMV and tax basis capital account will equal ${{[a(19)]:#,###}}. Her tax basis would include a one-third share of the LLC debt, or ${{[a(26)]:#,###}}.J&J, LLC-No gain or loss recognized and no adjustments to assets and liabilities. Members' capital accounts are adjusted as indicated.If member C received a one-third profits interest for her services, the following tax consequences would result:A-No deduction would be available to member A because member C would not receive anything if the LLC were to liquidate immediately after the contribution. His tax basis would include a one-third share of the LLC debt, or ${{[a(26)]:#,###}}.B-No deduction would be available to member B because member C would not receive anything if the LLC were to liquidate immediately after the contribution. His tax basis would include a one-third share of the LLC debt, or ${{[a(26)]:#,###}}.C-Member C would not recognize any income because the liquidation value of her partnership interest is zero with a profits interest. Additionally, member C would have ${{[a(31)]:#}} in both her FMV and tax basis capital accounts. Her tax basis would include a one-third share of the LLC debt, or ${{[a(26)]:#,###}}. From this point forward, C's capital accounts will be adjusted to reflect her share of future LLC profits and losses.J&J, LLC-No gain or loss recognized and no adjustments to assets and liabilities.

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

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