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?
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