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:CashInvestmentsLandBasis$ 260,000300,000200,000Totals$ 760,000Liabilities and capital:$ 180,000290,000290,000$ 760,000Fair MarketValue$ 260,000322,000390,000$ 972,000$ 180,000396,000396,000Nonrecourse liabilitiesTatsuki*Robert*Totals$ 972,000*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.

Partnership taxation refers to the system by which the tax obligations of a partnership entity are…

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 Basis $ 260,000 300,000 200,000 Fair Market Value $ 260,000 322,000 390,000 $ 972,000 Totals $ 760,000 Liabilities and capital: Nonrecourse liabilities $ 180,000 290,000 290,000 $ 760,000 $ 972,000 $ 180,000 396,000 396,000 Tatsuki* Robert* Totals *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.

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 Basis $ 260,000 300,000 200,000 Fair Market Value $ 260,000 322,000 390,000 $ 972,000 Totals $ 760,000 Liabilities and capital: Nonrecourse liabilities $ 180,000 290,000 290,000 $ 760,000 $ 972,000 $ 180,000 396,000 396,000 Tatsuki* Robert* Totals *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.

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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