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Exercise 10-17(Algorithmic)(LO.3) Wozniacki and Wilcox form Jewel LLC, with each receiving a one-half...

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Accounting

Exercise 10-17(Algorithmic)(LO.3)
Wozniacki and Wilcox form Jewel LLC, with each receiving a one-half interest in the capital and profits of the LLC. Wozniacki receives the
one-half interest as compensation for tax planning services rendered prior to the formation of the LLC. Wilcox contributes $118,925 cash.
The value of a one-half capital interest in the LLC (for each of the parties) is $118,925.
a. How much income does Wozniacki recognize as a result of this transaction, and what is its character?
Wozniacki recognizes $
as
b. How much is Wozniacki's basis in the LLC interest? How will Jewel LLC treat this amount?
His basis is $
and the partnership
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