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 capital:Nonrecourse liabilitiesLance"RobertTotalsBasis$ 130,000180,000210,000$ 520,000Tax basis$ 190,000165,000165,000$ 520,000DaveFair MarketValue*Assume that Lance's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus theirrespective shares of nonrecourse liabilities. (Leave no answer blank. Enter zero if applicable.)Lancea. Compute and characterize any gain or loss Dave may have to recognize as a result of his admission to Cirque Capital.Gain or loss recognizedas Ordinary income$ 130,000207,000320,000$ 657,000b. Compute each member's tax basis in his LLC interest immediately after Dave's receipt of his interest.$ 190,000233,500233,500$ 657,000Robert

Partnership interest refers to the portion of equity interest in the partnership company. Every…

Answered: Dave LaCroix recently received a 10…

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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PART 1: Nomad Corporation (a calendar year, accrual basis taxpayer) had the following transactions in 2021: Taxable Income $295,000 Federal Income Tax Liability Paid 69,300 Tax-Exempt Interest Income 3,000 Excess of Capital Loss over Capital Gains 7,000 Section 179 Expense elected in 2021 15,000 Dividends Received from Domestic Corporation (less than 40,000 20% owned) MACRS Depreciation deduction 18,000 Straight-line depreciation using ADS class lives 10,000 Compute Nomad's E & P for tax year 2021 PART 2: On June 30th, Nomad Corporation distributes $100,000 to Jack and Jill, who each own 50% of the corporation. At the beginning of the current year, Nomad corporation has a deficit in accumulated E&P of $(53,000). Using the figure for current E&P that you calculated for Nomad Corporation, determine the tax treatment of distribution for the shareholders. (assume each shareholder has adequate basis in the corporation).
dppiies lo questiol displayed Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $305,000 in return for 50 percent of the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporation's stock: (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) Adjusted Tax FMV Basis $ 114,375 266,875 $ 381,250 $ 30,500 122,000 $ 152,500 Building Land Total To equalize the exchange, Wizard Corporation paid Hermione $76,250 in addition to her stock. Assume Hermione's adjusted tax basis in the land was $381,250. i. What adjusted tax basis does Wizard Corporation take in the land and building received from Hermione? Land Building Adjusted tax basis $ 53,375
Taxation thru business entities
he Whitewater LLP is equally owned by three partners and shows the following balance sheet at the end of the current tax year. Basis FMV Cash $81,000 $81,000 Unrealized receivables 0 27,000 Land 27,000 108,000 $108,000 $216,000 Petula, capital $36,000 $72,000 Prudence, capital 36,000 72,000 Primrose, capital 36,000 72,000 $108,000 $216,000 Partner Petula is an active (i.e., "general") partner retiring from the service-oriented partnership. She receives $81,000 cash, none of which is stated to be for goodwill. a. How much of the payment is for "unstated goodwill"? b. How is the $81,000 allocated between a § 736(a) income payment and a § 736(b) property payment? The $81,000 cash payment is allocated as follows:§ 736(a) income payment: § 736(b) property payment:
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X derived the following income in 2020: Business income of P400,000 Compensation income of P200,000 Interest income from 5/6 lending to clients: P150,000 Interest income from bank deposits in the amount of P25,000. Royalty income for the sale of books where he is the author: P120,000. Capital gain on sale of personal car in the amount of P20,000. Capital gain on the sale of stocks directly to buyer: P30,000. Ordinary gain on sale of old office furniture in the amount of P10,000. Dividend income from stocks of San Miguel Corporation: P60,000. Proceeds received from the life insurance of his deceased father: P1,000,000 what is the total income of X which is subject to regular tax?
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! 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 cana Totals Liabilities and capital: Nonrecourse liabilities Tatsuki* Robert* Totals Tax basis $ Dave 0 Basis *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. Tatsuki $ 150,000 200,000 150,000 $ 500,000 b. Compute each member's tax basis in his LLC interest immediately after Dave's receipt of his interest. Robert $ 100,000 200,000 200,000 $…
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 cama Totals Liabilities and capital: Nonrecourse liabilities Tatsuki* Robert* Totals Basis Gain or loss recognized $ 150,000 200,000 150,000 $ 500,000 as $ 100,000 200,000 200,000 $500,000 Fair Market Value $ 150,000 700,000 250,000 $1,100,000 *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. $ 100,000 500,000 500,000 $ 1,100,000 d. Compute and…
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