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 Tatsuki* Robert Totals Basis $ 180,000 130,000 230,000 $ 540,000 $ 210,000 165,000 165,000 $ 540,000 Fair Market Value $ 180,000 157,000 420,000 $ 757,000 $ 210,000 273,500 273,500 $757,000 *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. Prepare a balance sheet for Cirque Capital immediately after Dave's admission showing the members' tax capital accounts and their pital accounts stated at fair market value.
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 Tatsuki* Robert Totals Basis $ 180,000 130,000 230,000 $ 540,000 $ 210,000 165,000 165,000 $ 540,000 Fair Market Value $ 180,000 157,000 420,000 $ 757,000 $ 210,000 273,500 273,500 $757,000 *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. Prepare a balance sheet for Cirque Capital immediately after Dave's admission showing the members' tax capital accounts and their pital accounts stated at fair market value.
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 28P
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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
Totals
Liabilities and capital:
Nonrecourse liabilities
Tatsuki*
Robert*
Totals
Assets:
Cash
Investments
Totals
Land
Totals
Capital:
*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.
Nonrecourse Debt
Capital-Tatsuki
Capital-Robert
Capital-Dave
. Prepare a balance sheet for Cirque Capital immediately after Dave's admission showing the members' tax capital accounts and their
capital accounts stated at fair market value.
Cirque, LLC
Balance Sheet
Tax Basis
S
$
$
Answer is not complete.
$
704(b) or FMV
180,000
130,000
230,000
540,000 S
S
210,000 S
210,000 S
180,000
157,000
420,000
757,000
Basis
$ 180,000
130,000
230,000
$540,000
210,000
$ 210,000
165,000
165,000
$540,000
210,000
Fair Market
Value
$ 180,000
157,000
420,000
$ 757,000
$ 210,000
273,500
273,500
$ 757,000
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