[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 Totals Liabilities and capital: Nonrecourse liabilities Lance* Robert* Totals Tax basis Dave Basis $ 220,000 300,000 100,000 $ 620,000 Lance $ 200,000 210,000 210,000 $ 620,000 *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 liabilities. (Leave no answer blank. Enter zero if applicable.) Robert Fair Market Value b. Compute each member's tax basis in his LLC interest immediately after Dave's receipt of his interest. $ 220,000 330,000 260,000 $ 810,000 $ 200,000 305,000 305,000 $ 810,000
[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 Totals Liabilities and capital: Nonrecourse liabilities Lance* Robert* Totals Tax basis Dave Basis $ 220,000 300,000 100,000 $ 620,000 Lance $ 200,000 210,000 210,000 $ 620,000 *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 liabilities. (Leave no answer blank. Enter zero if applicable.) Robert Fair Market Value b. Compute each member's tax basis in his LLC interest immediately after Dave's receipt of his interest. $ 220,000 330,000 260,000 $ 810,000 $ 200,000 305,000 305,000 $ 810,000
Chapter13: Choice Of Business Entity—general Tax And Nontax Factors/formation
Section: Chapter Questions
Problem 55P
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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
Totals
Liabilities and capital:
Nonrecourse liabilities
Lance*
Robert*
Totals
Tax basis
Dave
Basis
Lance
$ 220,000
300,000
100,000
$ 620,000
Robert
$ 200,000
210,000
210,000
$ 620,000
*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 liabilities. (Leave no answer blank. Enter zero if applicable.)
Fair Market
Value
b. Compute each member's tax basis in his LLC interest immediately after Dave's receipt of his interest.
$ 220,000
330,000
260,000
$ 810,000
$ 200,000
305,000
305,000
$ 810,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb9bfdcce-9d16-48cc-b9be-c4f7281bfaa8%2F1912c7d0-9feb-4a03-bb8f-33d24513b9c9%2Fviwe5f_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:
Assets:
Cash
Investments.
Land
Totals
Liabilities and capital:
Nonrecourse liabilities
Lance*
Robert*
Totals
Tax basis
Dave
Basis
Lance
$ 220,000
300,000
100,000
$ 620,000
Robert
$ 200,000
210,000
210,000
$ 620,000
*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 liabilities. (Leave no answer blank. Enter zero if applicable.)
Fair Market
Value
b. Compute each member's tax basis in his LLC interest immediately after Dave's receipt of his interest.
$ 220,000
330,000
260,000
$ 810,000
$ 200,000
305,000
305,000
$ 810,000
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