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 Capitals balance sheet on the day Dave received his capital interest appears below:

	Basis			Fair Market Value
Assets:
Cash	$	280,000		$	280,000
Investments		220,000			247,000
Land		160,000			350,000
Totals	$	660,000		$	877,000
Liabilities and capital:
Nonrecourse Debt	$	200,000		$	200,000
Lance*		230,000			338,500
Robert*		230,000			338,500
Totals	$	660,000		$	877,000

*Assume that Lances basis and Roberts basis in their LLC interests equal their tax basis capital accounts plus their respective shares of nonrecourse debt. (Leave no answer blank. Enter zero if applicable.)

Please complete all parts! Thank you!

a. Compute and characterize any gain or loss Dave may have to recognize as a result of his admission to Cirque Capital.

b. Compute each members tax basis in his LLC interest immediately after Daves receipt of his interest. (Dave, Lance and Roberts)

c. Prepare a balance sheet for Cirque Capital immediately after Daves admission showing the members tax capital accounts and their capital accounts stated at fair market value.

d. Compute and characterize any gain or loss Dave may have to recognize as a result of his admission to Cirque Capital if he receives only a profits interest.

e. Compute each members tax basis in his LLC interest immediately after Daves receipt of his interest if Dave receives only a profits interest. (Dave, Lance and Roberts)

Cirque, LLC Balance Sheet Tax Basis 704(b)/FMV Assets: Cash Investments Land Totals Capital: Nonrecourse Debt Capital-Lance Capital-Robert Capital-Dave Totals