Wozniacki and others form Jewel LLC, with each receiving a one-fifth interest in the capital and profits of the LLC. Wozniacki receives his one-fifth interest as compensation for tax planning services he rendered prior to the formation of the LLC. The other partners each contribute $245,675 cash. The value of a one-fifth capital interest in the LLC (for each of the parties) is $245,675.
a. How much income does Wozniacki recognize as a result of this transaction, and what is the character of the income?
b. How much is Wozniacki’s basis in the LLC interest?
c. How will Jewel treat this amount?
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Wozniacki and others form Jewel LLC, with each receiving a one-fifth interest in the capital and pro...
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