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.
Chapter11: Investor Losses
Section: Chapter Questions
Problem 46P
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Question
Transcribed Image Text: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
Totals
$ 760,000
Liabilities and capital:
$ 180,000
290,000
290,000
$ 760,000
Fair Market
Value
$ 260,000
322,000
390,000
$ 972,000
$ 180,000
396,000
396,000
Nonrecourse liabilities
Tatsuki*
Robert*
Totals
$ 972,000
*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.
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