Wozniacki and Wilcox form Jewel LLC, with each investor receiving a one-half interest in the capital and profits of the LLC. Wozniacki receives his one-half interest as compensation for tax planning services that he rendered prior to the formation of the LLC. Wilcox contributes $50,000 cash. The value of a onehalf capital interest in the LLC (for each of the parties) is $50,000.
a. Compute Wozniacki's realized and recognized gain from joining Jewel.
b. Compute Wozniacki's basis in his interest in Jewel.
c. How does Jewel treat the services that Wozniacki has rendered?