1 Name of Partner: Alex Evans 2 3 Indicate: 5 6 7 8 Partner's share of...
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1 Name of Partner: Alex Evans 2 3 Indicate: 5 6 7 8 Partner's share of liabilities at year end: 10 11 16 17 18 19 12 13 Partner's capital account analysis 14 15 20 21 22 23 24 Schedule K 25 26 Line 1 27 Line 2 28 Line 3 29 Line 43 30 Line 4c 31 Line S 32 Line 6a 33 Line 6b 34 Line 7 35 Line 8 36 Line 93 37 Line 9b 38 Line 9c 39 Une 10 General partner or LLC member manager Limited partner or other LLC member Domestic partner Foreign partner 40 Line 11 41 Line 12 42 Line 13 43 Line 13 44 Line 145 45 Une 15 46 Line 16 47 Line 17 48 Line 18 49 Une 18 50 Line 19 51 Une 20 52 Line 20 53 Line 20 54 Une 20 Nonrecourse Qualified nonrecourse Recourse Beginning capital account Capital contributed during the year Current year increase (decrease) Withdrawals and distributions Ending capital account Indicate how capital account calculated (Le tax basis, GAAP, 704(b)) Indicate if the partner contributed property with a built in gain or loss? Ordinary business income (loss) Net rental real estate income (loss) Other net rental income (loss) Guaranteed payments (Services) Total Guaranteed payments Interest income Ordinary dividends Qualified dividends Royalties Net short term capital gain (loss) Net long term capital gain (los) Collectibles (28% gain) Unrecaptured section 1250 gain Net section 1231 gain (loss) Other Income (lass) Section 179 deduction Other deductions Cash contribution (Code A) Other deductions Investment interest exp (Code H) Self employment earnings (loss) Credits Foreign transactions Alternative minimum tax (AMT) Items Tax exempt income (code A) Nondeductible expenses (Code C) Distributions (Code A) Other Information Code A Other information (Code B) QBI (Code Z) QBI (Code Z) Amounts Equals basis of property contributed. Ending Tax Basis. equals Une 1 ordinary business Income/(loss) less Sec. 179 expense equals Line 2 net rental real estate income/loss) 1 Name of Partner: Kate Winters 2 3 Indicate: 4 5 6 7 8 Partner's share of liabilities at year end: 9 10 11 12 13 Partner's capital account analysis 14 15 16 17 18 19 20 21 22 23 24 Schedule K 25 26 Line 1 27 Line 2 28 Line 3 29 Line 43 30 Line 4c 31 Line 5 32 Une 6 33 Line 6b 34 Line 7 35 Line 8 36 une 9a 37 Line 9b 38 Line 9c 39 Line 10 40 Une 11 41 Une 12 42 Line 13 43 Une 13 44 Line 143 45 Line 15 46 Line 16 47 Line 17 48 Line 18 49 Une 18 50 une 19 51 June 20 General partner or LLC member manager Umited partner or other LLC member Domestic partner Foreign partner 52 Line 20 53 Une 20 54 Line 20 55 56 Nonrecourse Qualified nonrecourse Recourse Beginning capital account Capital contributed during the year Current year increase (decrease) Withdrawals and distributions Ending capital account Indicate how capital account calculated (Le tax basis, GAAP, 704(b)) Indicate if the partner contributed property with a built in gain or loss? Ordinary business income (loss) Net rental real estate income (loss) Other net rental income (los) Guaranteed payments (Services) Total Guaranteed payments Interest income Ordinary dividends Qualified dividends Royalties Net short term capital gain (los) Net long term capital gain (los) Collectibles (28% gain) Unrecaptured section 1250 gain Net section 1231 gain (los) Other Income (loss) Section 179 deduction Other deductions Cash contribution (Code A) Other deductions Investment interest exp (Code H) Self employment earnings (loss) Credits Foreign transactions Alternative minimum tax (AMT) items Tax exempt Income (code A) Nondeductible expenses (Code C Distributions (Code A) Other information (Code A) Other information (Code B) QBI (Code Z) QBI (Code Z) Amounts Equals basis of property contributed. Ending Tax Basis. equals Line 1 ordinary business income/(loss) less Sec. 179 expense equals Line 2 net rental real estate income/loss) 1 Name of Partner: LaTonya Dunn NH 2 3 Indicate: 4 5 6 7 8 Partner's share of liabilities at year end: Nonrecourse Qualified nonrecourse Recourse 10 11 12 13 Partner's capital account analysis 14 15 16 17 18 19 20 21 22 23 24 Schedule K 25 26 Line 1 27 Line 2 28 Line 3 29 Line 43 30 Line 4c 31 Line S 32 Line 63 33 Line 6b 34 Line 7 35 Line 8 36 Line 93 37 Line 9b 38 Line 9 39 Line 10 40 Une 11 41 Line 12 42 Line 13 General partner or LLC member manager Umited partner or other LLC member Domestic partner Foreign partner 43 Line 13 44 Line 143 45 Une 15 46 Line 16 47 Line 17 48 Line 18 49 Une 18 50 Line 19 51 Line 20 52 Line 20 53 Line 20 54 Une 20 55 Beginning capital account Capital contributed during the year Current year increase (decrease) Withdrawals and distributions Ending capital account Indicate how capital account calculated (Le tax basis, GAAP, 704(b)) Indicate if the partner contributed property with a built in gain or loss? Ordinary business income (loss) Net rental real estate income (loss) Other net rental income (loss) Guaranteed payments (Services) Total Guaranteed payments Interest income Ordinary dividends Qualified dividends Royalties Net short term capital gain (loss) Net long term capital gain (los) Collectibles (28% gain) Unrecaptured section 1250 gain Net section 1231 gain (loss) Other Income (loss) Section 179 deduction Other deductions Cash contribution (Code A) Other deductions Investment interest exp (Code H) Self employment earnings (loss) Credits Foreign transactions Alternative minimum tax (AMT) items Tax exempt income (code A) Nondeductible expenses (Code C Distributions (Code A) Other Information Code A Other information (Code 8) QBI (Code Z) QBI (Code Z) Amounts Equals basis of property contributed. Ending Tax Basis. equals Line 1 ordinary business income/(loss) less Sec. 179 expense equals Line 2 net rental real estate income/loss) 3 Name of Partnership : NIL Limited Partnership Form 1065 Line 1a 5 Line 1b 5 Line 1c =Line 2 3 Line 3 Line 4 0 Line 5 1 Line 6 2 Line 7 3 Line 8 4 Line 9 5 Line 10 6 Line 11 7 Line 12 8 Line 13 9 Line 14 0 Line 15 1 Line 16c 2 Line 17 3 Line 18 4 Line 19 5 Line 20 6 Line 21 7 Line 22 8 Gross receipts or sales Returns and allowances Balance COGS Gross profit Ordinary income from other partnerships, estates, and trusts Net farm profit (loss) Net gain (loss) from From 4797 Other income Total income (loss) Salaries and wages Guaranteed payments to partners Repairs and maintenance Bad debts Rents Taxes and licenses Interest Depreciation Depletion Retirement plans Employee benefit programs Other deductions-utilities Total deductions Ordinary business income (loss) Amounts Complete cells filled in yellow on all pages. Enter deductions as positive numbers. The goal for the project is understand the flow of a partnership return, and to analyze how the items reported by the partnership impact the partner. This assignment is completed using an external tool, ExPrep. Please email if you do not have a current subscription to ExPrep and we can discuss potential solutions. If desired, students without a current subscription to ExPrep may purchase a subscription at www.excelpreparation.com. Assignment Prepare pages one, four and five of Form 1065, U.S. Return of Partnership Income, and related Schedules K-1 (Form 1065) for NIL Limited Partnership for the calendar year ending December 31, 20X8. Highlighted boxes on the worksheet indicate places on the forms requiring numbers or other inputs. All other worksheets in the excel workbook are for your use reconciling and completing the required Form 1065 pages and Schedules K-1. Extra Credit Assignment Putting It All Together Students may work in pairs to complete the project. No more than two students may work together on the project. Please include both names on your submission. The project is due on Sunday, December 10 at noon. Facts On December 31, 20X7, Kate Winters, LaTonya Dunn, and Alex Evans formed the NIL Limited Partnership to negotiate NIL deals, develop marketing plans, and provide financial planning services for college athletes. The partnership adopts a calendar year and maintains their books and records on the tax basis using the cash basis method of accounting. The partners have equal ownership in the partnership with Alex as the sole general partner. The partnership and partner's identification numbers and addresses are detailed below. NIL Limited Partnership Kate Winters LaTonya Dunn Alex Evans 8000 Crescent Drive Cary, NC 27513 EIN: 12-3456789 145 Masters Drive, Cary, NC 27518 SSN: 426-55-1245 223 Donegal Drive, Apex, NC 27502 SSN: 123-44-5678 3790 Kenan Way, Chapel Hill, NC 27517 SSN: 992-86-7645 Kate contributed $150,000 cash to the partnership in exchange for her partnership interest. 1 Name of Partnership: NIL Limited Partnership 2 3 Schedule K 4 5 Line 1 6 Line 2 7 Line 3a 8 Line 3b 9 Line 3c 10 Line 4a 11 Line 4c 12 Line 5 13 Line 6a 14 Line 6b 15 Line 7 16 Line 8 17 Line 9a 18 Line 9b 19 Line 9c 20 Line 10 21 Line 11 22 Line 12 23 Line 13a 24 Line 13b 25 Line 13c 26 Line 13d 27 Line 14a 49 Line 18a 50 Line 18b 51 Line 18c 52 Line 19a 53 Line 19b 54 Line 20a 55 Line 20b 56 Line 20c Ordinary business income (loss) Net rental real estate income (loss) Other gross rental income (loss) Expenses from other rental activities Other net rental income (loss) Guaranteed payments (services) Total Guaranteed payments Interest income Ordinary dividends Qualified dividends Royalties Net short-term capital gain (loss) Net long-term capital gain (loss) Collectibles (28% gain) Unrecaptured section 1250 gain Net section 1231 gain (loss) Other income (loss) Section 179 deduction Contributions Investment interest expense Section 59(e)(2) expenditures Other deductions Net earnings (loss) from self-employment Tax-exempt interest income Other tax-exempt income Nondeductible expenses Distributions of cash and marketable securities Distributions of other property Investment income Investment expenses Other items and amounts Amounts Enter deductions as positive numbers. footage as commercial office space. Assume net rental income detailed in the income schedule equals gross income less allocable rental expenses including depreciation. On June 12, 20X8, the partners agree to leverage their marketable securities by taking out a margin loan of $30,000 and investing the proceeds in 250 shares of Tango Inc. The marketable security portfolio collateralizes the loan. The loan is due in nine months unless renewed by the partners. The partnership expends a portion of its cash to purchase an Orange County North Carolina Limited Obligation bond for $25,000, 4.5% coupon, maturing in 2030. In addition, during 20X8 the partnership takes out a $45,000 interest-only loan to purchase computer equipment, furniture, and fixtures. The loan is not secured by the property but rather guaranteed by the partnership. The term of the loan is five-years. As detailed in the financial information below, the partnership deducts the entire cost of the newly purchased fixed assets as a IRC Section 179 expense. As manager of partnership, Alex receives a guaranteed payment of $3,800 per month starting April 1, 20X8 in addition to his distributive share. Lastly, assume the partnership realizes and recognizes the following income, expense, gain, and loss items for 20X8. Gross receipts Ordinary dividends (100% qualified) Tax-exempt income (NC sourced bond) Net rental income from office space Cash charitable contribution to UNC Depreciation on new building Section 179 expense for new fixed assets Investment interest expense Interest expense-building loan Interest expense-computers, etc. Federal penalty for failure to make timely payroll deposits Repairs and maintenance for business use portion of building Salaries to non-owners Guaranteed payment to Alex Utilities for business use portion of building Property taxes for business use portion of building Cash distribution to each partner $225,000 $4,500 $1,125 $12,300 $15,000 $45,000 $2,400 $13,500 $2,700 $1,230 $8.760 $87,000 $34,200 $11,310 $6,300 $25,000 ($75,000 total) 3 Name of Partnership: NIL Limited Partnership Analysis of Net Income (Loss) Line 1 Line 2 Line 2a Line 2b Analysis by partner type: General Partners- Limited partners Schedule L-Balance Sheet per Books Line 1 Line 2a Line 2b Line 3 Line 4 Line 5 Line 6 Line 7a Line 7b Line 8 Line 9a Line 9b Line 10a Line 10b Line 11 Line 12a Line 12b Line 13 Line 14 Line 15 Line 16 Line 17 Line 18 Line 19a Line 19b Line 20 Line 21 Line 22 Net income (loss). Line 4 Line 5 Assets Cash Trade notes and accounts receivable Less allowance for bad debts Inventories U.S. government obligations Tax-exempt securities Other current assets Loans to partners Mortgage and real estate loans Other investments Buildings and other depreciable assets Less accumulated depreciation Depletable assets Less accumulated depreciation Land Intangible assets Less accumulated amortization Other assets Total assets Liabilities and Capital Accounts payable Mortgages, notes, bonds payable less than 1 year Other current liabilities All nonrecourse loans Loans from partners (or related persons) Recourse debt Other liabilities Partners' capital accounts Total liabilities and capital Corporate Schedule M-1 Reconciliation of Income (Loss) per Books with Income (Loss) per Return Line 1 Net income (loss) per books Line 2 Income included on Schedule K not recorded on books Line 3 Guaranteed payments (other than health insurance) Expenses recorded on books this year not included on Schedule K-Nondeductible penalty- Add lines 1-4 Line C4 should equal line 147. Individual (passive) Beginning of tax year (a) (b) Schedule M-2 Analysis of Partners' Capital Accounts (Computed on Tax Basis) Line 1 Balance at beginning of year Capital contributed: cash Line 2 Line 2b Capital contributed: property Line 3 Net income (loss) per books Line 4 Other increases line 5 Add lines 1-4 Individual (active) Line 6 Line 6a Line 7 Line 8 Line 9 Line 6a Line 6b Line 7 Line 8 Line 9 Partnership Add lines 6 & 7 Income (loss) (c) Income on books this year not included on Schedule K Tax-exempt income Deductions included on Sch K and not charged on books Distributions: cash Distributions: property Exempt Organization Other decreases Add lines 6 & 7 Balance at end of year End of tax year (d) Nominee/Other Line G39 should equal 154. 1 Name of Partner: Alex Evans 2 3 Indicate: 5 6 7 8 Partner's share of liabilities at year end: 10 11 16 17 18 19 12 13 Partner's capital account analysis 14 15 20 21 22 23 24 Schedule K 25 26 Line 1 27 Line 2 28 Line 3 29 Line 43 30 Line 4c 31 Line S 32 Line 6a 33 Line 6b 34 Line 7 35 Line 8 36 Line 93 37 Line 9b 38 Line 9c 39 Une 10 General partner or LLC member manager Limited partner or other LLC member Domestic partner Foreign partner 40 Line 11 41 Line 12 42 Line 13 43 Line 13 44 Line 145 45 Une 15 46 Line 16 47 Line 17 48 Line 18 49 Une 18 50 Line 19 51 Une 20 52 Line 20 53 Line 20 54 Une 20 Nonrecourse Qualified nonrecourse Recourse Beginning capital account Capital contributed during the year Current year increase (decrease) Withdrawals and distributions Ending capital account Indicate how capital account calculated (Le tax basis, GAAP, 704(b)) Indicate if the partner contributed property with a built in gain or loss? Ordinary business income (loss) Net rental real estate income (loss) Other net rental income (loss) Guaranteed payments (Services) Total Guaranteed payments Interest income Ordinary dividends Qualified dividends Royalties Net short term capital gain (loss) Net long term capital gain (los) Collectibles (28% gain) Unrecaptured section 1250 gain Net section 1231 gain (loss) Other Income (lass) Section 179 deduction Other deductions Cash contribution (Code A) Other deductions Investment interest exp (Code H) Self employment earnings (loss) Credits Foreign transactions Alternative minimum tax (AMT) Items Tax exempt income (code A) Nondeductible expenses (Code C) Distributions (Code A) Other Information Code A Other information (Code B) QBI (Code Z) QBI (Code Z) Amounts Equals basis of property contributed. Ending Tax Basis. equals Une 1 ordinary business Income/(loss) less Sec. 179 expense equals Line 2 net rental real estate income/loss) 1 Name of Partner: Kate Winters 2 3 Indicate: 4 5 6 7 8 Partner's share of liabilities at year end: 9 10 11 12 13 Partner's capital account analysis 14 15 16 17 18 19 20 21 22 23 24 Schedule K 25 26 Line 1 27 Line 2 28 Line 3 29 Line 43 30 Line 4c 31 Line 5 32 Une 6 33 Line 6b 34 Line 7 35 Line 8 36 une 9a 37 Line 9b 38 Line 9c 39 Line 10 40 Une 11 41 Une 12 42 Line 13 43 Une 13 44 Line 143 45 Line 15 46 Line 16 47 Line 17 48 Line 18 49 Une 18 50 une 19 51 June 20 General partner or LLC member manager Umited partner or other LLC member Domestic partner Foreign partner 52 Line 20 53 Une 20 54 Line 20 55 56 Nonrecourse Qualified nonrecourse Recourse Beginning capital account Capital contributed during the year Current year increase (decrease) Withdrawals and distributions Ending capital account Indicate how capital account calculated (Le tax basis, GAAP, 704(b)) Indicate if the partner contributed property with a built in gain or loss? Ordinary business income (loss) Net rental real estate income (loss) Other net rental income (los) Guaranteed payments (Services) Total Guaranteed payments Interest income Ordinary dividends Qualified dividends Royalties Net short term capital gain (los) Net long term capital gain (los) Collectibles (28% gain) Unrecaptured section 1250 gain Net section 1231 gain (los) Other Income (loss) Section 179 deduction Other deductions Cash contribution (Code A) Other deductions Investment interest exp (Code H) Self employment earnings (loss) Credits Foreign transactions Alternative minimum tax (AMT) items Tax exempt Income (code A) Nondeductible expenses (Code C Distributions (Code A) Other information (Code A) Other information (Code B) QBI (Code Z) QBI (Code Z) Amounts Equals basis of property contributed. Ending Tax Basis. equals Line 1 ordinary business income/(loss) less Sec. 179 expense equals Line 2 net rental real estate income/loss) 1 Name of Partner: LaTonya Dunn NH 2 3 Indicate: 4 5 6 7 8 Partner's share of liabilities at year end: Nonrecourse Qualified nonrecourse Recourse 10 11 12 13 Partner's capital account analysis 14 15 16 17 18 19 20 21 22 23 24 Schedule K 25 26 Line 1 27 Line 2 28 Line 3 29 Line 43 30 Line 4c 31 Line S 32 Line 63 33 Line 6b 34 Line 7 35 Line 8 36 Line 93 37 Line 9b 38 Line 9 39 Line 10 40 Une 11 41 Line 12 42 Line 13 General partner or LLC member manager Umited partner or other LLC member Domestic partner Foreign partner 43 Line 13 44 Line 143 45 Une 15 46 Line 16 47 Line 17 48 Line 18 49 Une 18 50 Line 19 51 Line 20 52 Line 20 53 Line 20 54 Une 20 55 Beginning capital account Capital contributed during the year Current year increase (decrease) Withdrawals and distributions Ending capital account Indicate how capital account calculated (Le tax basis, GAAP, 704(b)) Indicate if the partner contributed property with a built in gain or loss? Ordinary business income (loss) Net rental real estate income (loss) Other net rental income (loss) Guaranteed payments (Services) Total Guaranteed payments Interest income Ordinary dividends Qualified dividends Royalties Net short term capital gain (loss) Net long term capital gain (los) Collectibles (28% gain) Unrecaptured section 1250 gain Net section 1231 gain (loss) Other Income (loss) Section 179 deduction Other deductions Cash contribution (Code A) Other deductions Investment interest exp (Code H) Self employment earnings (loss) Credits Foreign transactions Alternative minimum tax (AMT) items Tax exempt income (code A) Nondeductible expenses (Code C Distributions (Code A) Other Information Code A Other information (Code 8) QBI (Code Z) QBI (Code Z) Amounts Equals basis of property contributed. Ending Tax Basis. equals Line 1 ordinary business income/(loss) less Sec. 179 expense equals Line 2 net rental real estate income/loss) 3 Name of Partnership : NIL Limited Partnership Form 1065 Line 1a 5 Line 1b 5 Line 1c =Line 2 3 Line 3 Line 4 0 Line 5 1 Line 6 2 Line 7 3 Line 8 4 Line 9 5 Line 10 6 Line 11 7 Line 12 8 Line 13 9 Line 14 0 Line 15 1 Line 16c 2 Line 17 3 Line 18 4 Line 19 5 Line 20 6 Line 21 7 Line 22 8 Gross receipts or sales Returns and allowances Balance COGS Gross profit Ordinary income from other partnerships, estates, and trusts Net farm profit (loss) Net gain (loss) from From 4797 Other income Total income (loss) Salaries and wages Guaranteed payments to partners Repairs and maintenance Bad debts Rents Taxes and licenses Interest Depreciation Depletion Retirement plans Employee benefit programs Other deductions-utilities Total deductions Ordinary business income (loss) Amounts Complete cells filled in yellow on all pages. Enter deductions as positive numbers. The goal for the project is understand the flow of a partnership return, and to analyze how the items reported by the partnership impact the partner. This assignment is completed using an external tool, ExPrep. Please email if you do not have a current subscription to ExPrep and we can discuss potential solutions. If desired, students without a current subscription to ExPrep may purchase a subscription at www.excelpreparation.com. Assignment Prepare pages one, four and five of Form 1065, U.S. Return of Partnership Income, and related Schedules K-1 (Form 1065) for NIL Limited Partnership for the calendar year ending December 31, 20X8. Highlighted boxes on the worksheet indicate places on the forms requiring numbers or other inputs. All other worksheets in the excel workbook are for your use reconciling and completing the required Form 1065 pages and Schedules K-1. Extra Credit Assignment Putting It All Together Students may work in pairs to complete the project. No more than two students may work together on the project. Please include both names on your submission. The project is due on Sunday, December 10 at noon. Facts On December 31, 20X7, Kate Winters, LaTonya Dunn, and Alex Evans formed the NIL Limited Partnership to negotiate NIL deals, develop marketing plans, and provide financial planning services for college athletes. The partnership adopts a calendar year and maintains their books and records on the tax basis using the cash basis method of accounting. The partners have equal ownership in the partnership with Alex as the sole general partner. The partnership and partner's identification numbers and addresses are detailed below. NIL Limited Partnership Kate Winters LaTonya Dunn Alex Evans 8000 Crescent Drive Cary, NC 27513 EIN: 12-3456789 145 Masters Drive, Cary, NC 27518 SSN: 426-55-1245 223 Donegal Drive, Apex, NC 27502 SSN: 123-44-5678 3790 Kenan Way, Chapel Hill, NC 27517 SSN: 992-86-7645 Kate contributed $150,000 cash to the partnership in exchange for her partnership interest. 1 Name of Partnership: NIL Limited Partnership 2 3 Schedule K 4 5 Line 1 6 Line 2 7 Line 3a 8 Line 3b 9 Line 3c 10 Line 4a 11 Line 4c 12 Line 5 13 Line 6a 14 Line 6b 15 Line 7 16 Line 8 17 Line 9a 18 Line 9b 19 Line 9c 20 Line 10 21 Line 11 22 Line 12 23 Line 13a 24 Line 13b 25 Line 13c 26 Line 13d 27 Line 14a 49 Line 18a 50 Line 18b 51 Line 18c 52 Line 19a 53 Line 19b 54 Line 20a 55 Line 20b 56 Line 20c Ordinary business income (loss) Net rental real estate income (loss) Other gross rental income (loss) Expenses from other rental activities Other net rental income (loss) Guaranteed payments (services) Total Guaranteed payments Interest income Ordinary dividends Qualified dividends Royalties Net short-term capital gain (loss) Net long-term capital gain (loss) Collectibles (28% gain) Unrecaptured section 1250 gain Net section 1231 gain (loss) Other income (loss) Section 179 deduction Contributions Investment interest expense Section 59(e)(2) expenditures Other deductions Net earnings (loss) from self-employment Tax-exempt interest income Other tax-exempt income Nondeductible expenses Distributions of cash and marketable securities Distributions of other property Investment income Investment expenses Other items and amounts Amounts Enter deductions as positive numbers. footage as commercial office space. Assume net rental income detailed in the income schedule equals gross income less allocable rental expenses including depreciation. On June 12, 20X8, the partners agree to leverage their marketable securities by taking out a margin loan of $30,000 and investing the proceeds in 250 shares of Tango Inc. The marketable security portfolio collateralizes the loan. The loan is due in nine months unless renewed by the partners. The partnership expends a portion of its cash to purchase an Orange County North Carolina Limited Obligation bond for $25,000, 4.5% coupon, maturing in 2030. In addition, during 20X8 the partnership takes out a $45,000 interest-only loan to purchase computer equipment, furniture, and fixtures. The loan is not secured by the property but rather guaranteed by the partnership. The term of the loan is five-years. As detailed in the financial information below, the partnership deducts the entire cost of the newly purchased fixed assets as a IRC Section 179 expense. As manager of partnership, Alex receives a guaranteed payment of $3,800 per month starting April 1, 20X8 in addition to his distributive share. Lastly, assume the partnership realizes and recognizes the following income, expense, gain, and loss items for 20X8. Gross receipts Ordinary dividends (100% qualified) Tax-exempt income (NC sourced bond) Net rental income from office space Cash charitable contribution to UNC Depreciation on new building Section 179 expense for new fixed assets Investment interest expense Interest expense-building loan Interest expense-computers, etc. Federal penalty for failure to make timely payroll deposits Repairs and maintenance for business use portion of building Salaries to non-owners Guaranteed payment to Alex Utilities for business use portion of building Property taxes for business use portion of building Cash distribution to each partner $225,000 $4,500 $1,125 $12,300 $15,000 $45,000 $2,400 $13,500 $2,700 $1,230 $8.760 $87,000 $34,200 $11,310 $6,300 $25,000 ($75,000 total) 3 Name of Partnership: NIL Limited Partnership Analysis of Net Income (Loss) Line 1 Line 2 Line 2a Line 2b Analysis by partner type: General Partners- Limited partners Schedule L-Balance Sheet per Books Line 1 Line 2a Line 2b Line 3 Line 4 Line 5 Line 6 Line 7a Line 7b Line 8 Line 9a Line 9b Line 10a Line 10b Line 11 Line 12a Line 12b Line 13 Line 14 Line 15 Line 16 Line 17 Line 18 Line 19a Line 19b Line 20 Line 21 Line 22 Net income (loss). Line 4 Line 5 Assets Cash Trade notes and accounts receivable Less allowance for bad debts Inventories U.S. government obligations Tax-exempt securities Other current assets Loans to partners Mortgage and real estate loans Other investments Buildings and other depreciable assets Less accumulated depreciation Depletable assets Less accumulated depreciation Land Intangible assets Less accumulated amortization Other assets Total assets Liabilities and Capital Accounts payable Mortgages, notes, bonds payable less than 1 year Other current liabilities All nonrecourse loans Loans from partners (or related persons) Recourse debt Other liabilities Partners' capital accounts Total liabilities and capital Corporate Schedule M-1 Reconciliation of Income (Loss) per Books with Income (Loss) per Return Line 1 Net income (loss) per books Line 2 Income included on Schedule K not recorded on books Line 3 Guaranteed payments (other than health insurance) Expenses recorded on books this year not included on Schedule K-Nondeductible penalty- Add lines 1-4 Line C4 should equal line 147. Individual (passive) Beginning of tax year (a) (b) Schedule M-2 Analysis of Partners' Capital Accounts (Computed on Tax Basis) Line 1 Balance at beginning of year Capital contributed: cash Line 2 Line 2b Capital contributed: property Line 3 Net income (loss) per books Line 4 Other increases line 5 Add lines 1-4 Individual (active) Line 6 Line 6a Line 7 Line 8 Line 9 Line 6a Line 6b Line 7 Line 8 Line 9 Partnership Add lines 6 & 7 Income (loss) (c) Income on books this year not included on Schedule K Tax-exempt income Deductions included on Sch K and not charged on books Distributions: cash Distributions: property Exempt Organization Other decreases Add lines 6 & 7 Balance at end of year End of tax year (d) Nominee/Other Line G39 should equal 154.
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Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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