The Dapper-Dons Partnership was formed ten years ago as a general partnership to custom tailor men's clothing. Dapper-Dons is located at 123 Flamingo Drive in City, ST, 54321. Bob Dapper manages the business and has a 40% capital and profits interest. His address is 709 Brumby Way, City, ST, 54321. Jeremy Dons owns the remaining 60% interest but is not active in the business. His address is 807 Ninth Avenue, City, ST, 54321. The partnership values its inventory using the cost method and did not change the method used during the current year. The partnership uses the accrual method of accounting. The partnership has no foreign partners, no foreign transactions, no interests in foreign trusts, and no foreign financial accounts. This partnership is neither a tax shelter nor a publicly traded partnership. No changes in ownership of partnership interests occurred during the current year. The partnership made cash distributions of $155,050 and $232,576 to Dapper and Dons, respectively, on December 30 of the current year. It made no other property distributions. Financial statements for the current year are presented in Tables C:9-1 and C:9-2. Ignore the U.S. (domestic) production activities deduction. Dapper Dons, being an eligible small pass-through partnership, uses the small business simplified overall method for reporting these activities (see discussion for Line 13d of Schedules K and K-1 in the Form 1065 instructions).?

Prepare a current year (2017 for this problem) partnership tax return for Dapper-Dons Partnership.

Table C:9-1:

Table C: 9-2:

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$2,357,000 (20,000) Sales Returns and allowances $2,337,000 $ 200,050 624,000 600,000 42,000 12,000 Beginning inventory (FIFO method) Purchases Labor Supplies Other costs Goods available for sale Ending inventory $1.478,050 (146,000) (1,332,050) $ 1,004,950 Gross profit Salaries for employees other than partners (W-2 wages) Guaranteed payment for Dapper Utilities expense Depreciation (MACRS depreciation is $74,311) Automobile expense Office supplies expense Advertising expense Bad debt expense Interest expense (all trade- or business-related) Rent expense Travel expense (meals cost $4,050 of this amount) Repairs and maintenance expense Accounting and legal expense Charitable contributions Payroll taxes Other taxes (all trade- or business-related) $51,000 85,000 46,428 49,782 12,085 4,420 85,000 2,100 45,000 7,400 11,020 68,300 3,600 16,400 5,180 1,400 Total expenses 494,115 $ 510,835 Operating profit Other income and losses: Gain on sale of AB stock Loss on sale of CD stock Sec. 1231 gain on sale of land9 Interest on U.S. Treasury bills for entire year ($80,000 face amount) Dividends from 15%-owned domestic corporation S 18,000 (26,075) 5,050 2,000 11,000 9,975 Net income S 520,810