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 $ 120,000 110,000 250,000 Fair Market Value $ 120,000 140,000 380,000 Totals $ 480,000 $ 640,000 Liabilities and capital: Nonrecourse liabilities $ 120,000 180,000 180,000 $ 120,000 260,000 260,000 $ 480,000 $ 640,000 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. 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: Assets: Cash Investments Land Basis $ 120,000 110,000 250,000 Fair Market Value $ 120,000 140,000 380,000 Totals $ 480,000 $ 640,000 Liabilities and capital: Nonrecourse liabilities $ 120,000 180,000 180,000 $ 120,000 260,000 260,000 $ 480,000 $ 640,000 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. 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.

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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