[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 Investments $ 220,000 300,000 100,000 $ 220,000 330,000 260,000 Land Barca Totals $ 620,000 $ 810,000 Liabilities and capital: DLAD Nonrecourse liabilities $ 200,000 $ 200,000 Lance* 210,000 210,000 305,000 305,000 Robert* Totals $ 620,000 $ 810,000 *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.) c. 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 704(b)/FMV Assets: Cash Investments Land Totals Capital: Nonrecourse Debt Capital-Lance Capital-Robert Capital-Dave Totals
[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 Investments $ 220,000 300,000 100,000 $ 220,000 330,000 260,000 Land Barca Totals $ 620,000 $ 810,000 Liabilities and capital: DLAD Nonrecourse liabilities $ 200,000 $ 200,000 Lance* 210,000 210,000 305,000 305,000 Robert* Totals $ 620,000 $ 810,000 *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.) c. 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 704(b)/FMV Assets: Cash Investments Land Totals Capital: Nonrecourse Debt Capital-Lance Capital-Robert Capital-Dave Totals
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 77EDC
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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
Investments
$ 220,000
300,000
100,000
$ 220,000
330,000
260,000
Land
Barca
Totals
$ 620,000
$ 810,000
Liabilities and capital:
DLAD
Nonrecourse liabilities
$ 200,000
$ 200,000
Lance*
210,000
210,000
305,000
305,000
Robert*
Totals
$ 620,000
$ 810,000
*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.)
c. 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
704(b)/FMV
Assets:
Cash
Investments
Land
Totals
Capital:
Nonrecourse Debt
Capital-Lance
Capital-Robert
Capital-Dave
Totals](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F386fafd1-1e1c-4432-8e33-d0017975ee71%2F98942297-ec77-4918-8736-e7ece2390a04%2Fxlc58k_processed.png&w=3840&q=75)
Transcribed Image Text:[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
Investments
$ 220,000
300,000
100,000
$ 220,000
330,000
260,000
Land
Barca
Totals
$ 620,000
$ 810,000
Liabilities and capital:
DLAD
Nonrecourse liabilities
$ 200,000
$ 200,000
Lance*
210,000
210,000
305,000
305,000
Robert*
Totals
$ 620,000
$ 810,000
*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.)
c. 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
704(b)/FMV
Assets:
Cash
Investments
Land
Totals
Capital:
Nonrecourse Debt
Capital-Lance
Capital-Robert
Capital-Dave
Totals
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