Janda and Kelsey contributed $1 million each to the JKL LLC in exchange for 45% capital and profits interests in the entity. Lilli will contribute no cash, but has agreed to manage the LLC's business operations in exchange for an $80,000 annual salary and a 10% interest in the LLC's capital and profits (valued at $200,000). What are the consequences of the entity formation and Lilli's compensation arrangement to the LLC members? To the LLC itself?
Answer to relevant QuestionsOn July 1 of the current year, the R&R Partnership was formed to operate a bed-and breakfast inn. The partnership paid $3,000 in legal fees for drafting the partnership agreement and $5,000 for accounting fees related to ...Continue with the same facts of Problem 13. Consider Amy's capital account. a. What is Amy's capital account at the beginning of the year? b. What is Amy's capital account at the end of the year? c. How do the capital ...The BCD Partnership plans to distribute cash of $20,000 to partner Brad at the end of the tax year. The partnership reported a loss for the year, and Brad's share of the loss is $10,000. Brad has a basis of $15,000 in the ...At the beginning of the tax year, Melodie's basis in the MIP LLC was $60,000, including Melodie's $40,000 share of the LLC's liabilities. At the end of the year, MIP distributed to Melodie cash of $10,000 and inventory ...Describe the tax treatment of a proportionate nonliquidating distribution of cash, land, and inventory. How are the partner's basis in the property received and the partner's gain or loss on the distribution determined? What ...
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