The AB partnership, a cash method, calendar year partnership, had the following income and expenses for the past calendar year:

(1) Gross income from business operations $130,000

(2) Expenses deductible under § 162(a) 40,000

(3) Depreciation on machinery (calculated under the 200% declining balance method) 30,000

(4) Charitable gifts 20,000

(5) 30,000 Gain on sale of equipment used in the partnership business, $20,000 of which is ordinary under § 1245(a), and $10,000 of which is §1231 Sales Price 40,000, Basis, 10,000, Original Cost 20,000

(6) Short-term capital gain on stock sale 10,000.   Sales Price 110,000, Basis 100,000

(7) Interest on tax exempt bonds 40,000

(8) Dividends on stock 20,000

(9) Gain on the sale of land held for 4 years by the partnership for investment purposes 100. Sales price 300,000, basis 200,000

Balance sheet Data

Beginning Balance Sheet

Cash	200,000
Stock	300,000
Land	400,000
Equipment	500,000
Accum Deprec		100000
TE Bonds	100,000
Nonrecourse Debt		40,000
Recourse Debt		60,000
A Capital		650,000
B Capital		650,000
	1,500,000	1,500,000

A and B use the cash method and the calendar year. Assume the following.

A is a general Partner and B is a limited partner.

 

	Profit Ratio	Loss Ratio	Capital Ratio
A	60	40	50
b	40	60	50

 

1. Prepare an 1120S, fill out page 1, schedule K and the balance sheet and prepare k-1s for A and B.

Answer rating: 100% (QA)

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