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Dave LaCroix recently received a 10 percent capital and profits interest in Cirque Capital LLC...

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Accounting

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:
Basis Fair Market Value
Assets:
Cash $ 210,000 $ 210,000
Investments 100,000126,000
Land 290,000420,000
Totals $ 600,000 $ 756,000
Liabilities and capital:
Nonrecourse liabilities $ 230,000 $ 230,000
Tatsuki*185,000263,000
Robert*185,000263,000
Totals $ 600,000 $ 756,000
*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. Compute each member's tax basis in his LLC interest immediately after Dave's receipt of his interest.

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