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

Essay

J&J, LLC, was in its third year of operations when J&J decided to expand the number of members from two, A and 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 one-third 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 one-third profits interest, what would be the tax consequences to members A, B, and C, and to J&J?
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ J&J Lumrited Luability Compary
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ Balance Sheet
$\begin{array}{lrrlrr} &{\text { Basis }} & \text { FMV } & &\text { Basis } & \text { FMV } \\\text { Cash } & \$ 20,000 & \$ 20,000& \text { Account Payable } & \$ 7,000 & \$ 7,000 \\\text { Inventory } & 5,000 & 5,000 & \text { Mortgage Payable } & 20,000 & 20,000 \\\text { Equipment } & 10,000 & 17,000 & & & \\\text { Building } &\underline{ 30,000 }& \underline{45,000 }& \text { A-Capital } & 22,000 & 30,000 \\& & & \text { B-Capital } & \underline{16,000} & \underline{30,000 }\\\text { Total Assets } & \$ 65,00 0 & \$ 87,000 & \text { Total Liab. and OE } & \$ 65,000 & \$ 87,000\end{array}$