compensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below: Fair Market Value Asseta: Cash Investments Land Totals Liabilities and capital: Nonrecourse liabilities Tatsuki Robert Totals Basis $ 160,000 270,000 220,000 $ 650,000 as $ 220,000 215,000 215,000 $ 650,000 $160,000 290,000 350,000 $800,000 $ 220,000 290,000 290,000 $800,000 'Assume that Tatsuki's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus their respective shares of nonrecourse liabilities. Note: Leave no answer blank. Enter zero if applicable. d. Compute and characterize any gain or loss Dave may have to recognize as a result of his admission to Cirque Capital if he receives only a profits interest. Gain or loss recognized
compensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below: Fair Market Value Asseta: Cash Investments Land Totals Liabilities and capital: Nonrecourse liabilities Tatsuki Robert Totals Basis $ 160,000 270,000 220,000 $ 650,000 as $ 220,000 215,000 215,000 $ 650,000 $160,000 290,000 350,000 $800,000 $ 220,000 290,000 290,000 $800,000 'Assume that Tatsuki's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus their respective shares of nonrecourse liabilities. Note: Leave no answer blank. Enter zero if applicable. d. Compute and characterize any gain or loss Dave may have to recognize as a result of his admission to Cirque Capital if he receives only a profits interest. Gain or loss recognized
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
4
![Required information
[The following information applies to the questions displayed below.]
Dave LaCroix recently received a 10 percent capital and profits interest in Cirque Capital LLC in exchange for consulting
services he provided. If Cirque Capital had paid an outsider to provide the advice, it would have deducted the payment as
compensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below.
Assets:
Cash
Investments
Land
Totals
Liabilities and capitali
Nonrecourse liabilities
Tatsuki
Robert
Totals
Tax basis
Dave
Basis
Tatsuki
$ 160,000
270,000
220,000
$ 650,000
Robert
$ 220,000
215,000
215,000
$650,000
"Assume that Tatsuki's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus their
respective shares of nonrecourse liabilities.
Note: Leave no answer blank. Enter zero if applicable.
Fair Market
Value
e. Compute each member's tax basis in his LLC interest immediately after Dave's receipt of his interest if Dave receives only a profits
Interest.
$ 160,000
290,000
350,000
$800,000
$ 220,000.
290,000
290,000
$800,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb9a81e89-2c71-430b-b2ab-d050d4f3187b%2Fc79fd30c-9a49-488b-912c-7d07e958699d%2Faysvaib_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Dave LaCroix recently received a 10 percent capital and profits interest in Cirque Capital LLC in exchange for consulting
services he provided. If Cirque Capital had paid an outsider to provide the advice, it would have deducted the payment as
compensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below.
Assets:
Cash
Investments
Land
Totals
Liabilities and capitali
Nonrecourse liabilities
Tatsuki
Robert
Totals
Tax basis
Dave
Basis
Tatsuki
$ 160,000
270,000
220,000
$ 650,000
Robert
$ 220,000
215,000
215,000
$650,000
"Assume that Tatsuki's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus their
respective shares of nonrecourse liabilities.
Note: Leave no answer blank. Enter zero if applicable.
Fair Market
Value
e. Compute each member's tax basis in his LLC interest immediately after Dave's receipt of his interest if Dave receives only a profits
Interest.
$ 160,000
290,000
350,000
$800,000
$ 220,000.
290,000
290,000
$800,000
![Required information
[The following information applies to the questions displayed below.]
Dave LaCroix recently received a 10 percent capital and profits interest in Cirque Capital LLC in exchange for consulting
services he provided. If Cirque Capital had paid an outsider to provide the advice, it would have deducted the payment as
compensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below:
Assets:
Cash
Investments
Land
Totals
Liabilities and capitali.
Nonrecourse liabilities
Tatsuki
Robert
Totals
Basis
Gain or loss recognized
$ 160,000
270,000
220,000
$ 650,000
05
$ 220,000
215,000
215,000
$ 650,000
Fair Market
Value
$ 160,000
290,000
350,000
$ 800,000
"Assume that Tatsuki's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus their
respective shares of nonrecourse liabilities.
Note: Leave no answer blank. Enter zero if applicable.
$ 220,000
290,000
290,000
$800,000
d. Compute and characterize any gain or loss Dave may have to recognize as a result of his admission to Cirque Capital if he receives
only a profits interest.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb9a81e89-2c71-430b-b2ab-d050d4f3187b%2Fc79fd30c-9a49-488b-912c-7d07e958699d%2Fp7ya7i_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Dave LaCroix recently received a 10 percent capital and profits interest in Cirque Capital LLC in exchange for consulting
services he provided. If Cirque Capital had paid an outsider to provide the advice, it would have deducted the payment as
compensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below:
Assets:
Cash
Investments
Land
Totals
Liabilities and capitali.
Nonrecourse liabilities
Tatsuki
Robert
Totals
Basis
Gain or loss recognized
$ 160,000
270,000
220,000
$ 650,000
05
$ 220,000
215,000
215,000
$ 650,000
Fair Market
Value
$ 160,000
290,000
350,000
$ 800,000
"Assume that Tatsuki's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus their
respective shares of nonrecourse liabilities.
Note: Leave no answer blank. Enter zero if applicable.
$ 220,000
290,000
290,000
$800,000
d. Compute and characterize any gain or loss Dave may have to recognize as a result of his admission to Cirque Capital if he receives
only a profits interest.
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