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: Fair Market Value Basis Assets: Cash $ 160,000 Investments $ 160,000 270,000 220,000 290,000 350,000 Land Totals $ 650,000 $ 800,000 Liabilities and capital: Nonrecourse liabilities $ 220,000 $ 220,000 Lance* 215,000 215,000 290,000 290,000 Robert* Totals $ 650,000 $ 800,000 *Assume that Lance's basis and Robert's basis in their LLC Interests equal their tax basis capital accounts plus their respective shares of nonrecourse llabilities. (Leave no answer blank. Enter zero if applicable.) 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.
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: Fair Market Value Basis Assets: Cash $ 160,000 Investments $ 160,000 270,000 220,000 290,000 350,000 Land Totals $ 650,000 $ 800,000 Liabilities and capital: Nonrecourse liabilities $ 220,000 $ 220,000 Lance* 215,000 215,000 290,000 290,000 Robert* Totals $ 650,000 $ 800,000 *Assume that Lance's basis and Robert's basis in their LLC Interests equal their tax basis capital accounts plus their respective shares of nonrecourse llabilities. (Leave no answer blank. Enter zero if applicable.) 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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[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:
Fair Market
Value
Basis
Assets:
Cash
$ 160,000
Investments
$ 160,000
270,000
220,000
290,000
350,000
Land
Totals
$ 650,000
$ 800,000
Liabilities and capital:
Nonrecourse liabilities
$ 220,000
$ 220,000
Lance*
215,000
290,000
Robert*
215,000
290,000
Totals
$ 650,000
$ 800,000
*Assume that Lance's basis and Robert's basis in their LLC Interests equal their tax basis capital accounts plus their
respective shares of nonrecourse llabilities. (Leave no answer blank. Enter zero if applicable.)
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.
Dave
Lance
Robert
Tax basis](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7a0f5af7-c460-4f0e-ac33-2e68a2f747b1%2Fc49ca6fc-ea16-40f0-9dc7-67bc3e38e32d%2Fy6ikcri_processed.png&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:
Fair Market
Value
Basis
Assets:
Cash
$ 160,000
Investments
$ 160,000
270,000
220,000
290,000
350,000
Land
Totals
$ 650,000
$ 800,000
Liabilities and capital:
Nonrecourse liabilities
$ 220,000
$ 220,000
Lance*
215,000
290,000
Robert*
215,000
290,000
Totals
$ 650,000
$ 800,000
*Assume that Lance's basis and Robert's basis in their LLC Interests equal their tax basis capital accounts plus their
respective shares of nonrecourse llabilities. (Leave no answer blank. Enter zero if applicable.)
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.
Dave
Lance
Robert
Tax basis
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