Wozniacki and others form Jewel LLC, with each receiving a one-eighth interest in the capital and profits of the LLC. Wozniacki receives the one-eighth interest as compensation for tax planning services rendered prior to the formation of the LLC. The other partners each contribute $72,450 cash. The value of a one-eighth capital interest in the LLC (for each of the parties) is $72,450.

a. How much income does Wozniacki recognize as a result of this transaction, and what is its character? Wozniacki recognizes $______fill in the blank 1 as __________ .

b. How much is Wozniacki's basis in the LLC interest? How will Jewel LLC treat this amount? His basis is $_______fill in the blank 3 and the partnership ________ .