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

question 60

Essay

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 interest in 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 capital interest? If, instead, member C receives a 1/3 profit interest, what would be the tax consequences to members A, B, and C, and to J&J?

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Definitions:

Discrimination

Unjust or prejudicial treatment of different categories of people, especially based on race, age, sex, or disability.

Special Privileges

Unique rights or advantages granted to specific individuals or groups, not available to everyone.

Noncitizens

Individuals who do not hold citizenship status in the country in which they reside.

Temporary Work

Employment that is limited in duration, often to fulfill short-term needs of the hiring organization.