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 consultingservices he provided. If Cirque Capital had paid an outsider to provide the advice, it would have deducted the payment ascompensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below.Assets:CashInvestmentsLandTotalsLiabilities and capitaliNonrecourse liabilitiesTatsukiRobertTotalsTax basisDaveBasisTatsuki$ 160,000270,000220,000$ 650,000Robert$ 220,000215,000215,000$650,000"Assume that Tatsuki's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus theirrespective shares of nonrecourse liabilities.Note: Leave no answer blank. Enter zero if applicable.Fair MarketValuee. Compute each member's tax basis in his LLC interest immediately after Dave's receipt of his interest if Dave receives only a profitsInterest.$ 160,000290,000350,000$800,000$ 220,000.290,000290,000$800,000 Required information[The following information applies to the questions displayed below.]Dave LaCroix recently received a 10 percent capital and profits interest in Cirque Capital LLC in exchange for consultingservices he provided. If Cirque Capital had paid an outsider to provide the advice, it would have deducted the payment ascompensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below:Assets:CashInvestmentsLandTotalsLiabilities and capitali.Nonrecourse liabilitiesTatsukiRobertTotalsBasisGain or loss recognized$ 160,000270,000220,000$ 650,00005$ 220,000215,000215,000$ 650,000Fair MarketValue$ 160,000290,000350,000$ 800,000"Assume that Tatsuki's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus theirrespective shares of nonrecourse liabilities.Note: Leave no answer blank. Enter zero if applicable.$ 220,000290,000290,000$800,000d. Compute and characterize any gain or loss Dave may have to recognize as a result of his admission to Cirque Capital if he receivesonly a profits interest.

The full name of LLC is a Limited liability company. It's a form of company that secures its owners…

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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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