8. LO.2 Janda and Kelsey contributed $1,000,000 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?