Amy Smith (SSN 123-56-7890) and Betty Brown (SSN 125-892-4523) are partners in a partnership that owns and
Question:
Amy Smith (SSN 123-56-7890) and Betty Brown (SSN 125-892-4523) are partners in a partnership that owns and operates the A&B Salon (a hypothetical company). The partnership's first year of operation is 2020. Amy and Betty divide income and expenses equally. They are located at 1500 Broadway, Brooklyn, NY. 10005. Their federal employer ID number is 88-1234563, and the business code number is 812112. The 2020 financial statements for the partnership are presented below.
A&B Salon Income Statement
For the Year Ended December 31, 2020
Service Income $400,000
Employee salaries 90,000
Guaranteed Payments (services) 10,000
Payroll taxes 15,000
Entertainment 3.000
Repairs 5,000
Rent 40.000
Depreciation 6,000
Short-term capital loss 3,000
Charitable contributions 1,000
Net Income $227,000
A&B Salon Balance Sheet
As of December 31, 2020
Cash $110,000
Accounts Receivable 70,000
Equipment 35,000
Accumulated Depreciation 6,000
Total Assets $221,000
Accounts Payable 50,000
Partner's Capital 171,000
Total Liabilities and Equity $221,000
Instructions:
Amy lives at 123 Bay Street, Bay Ridge, NY 12305. Each partner initially contributed $25,000 to the business. Also, each partner withdrew $53,000 from the business and received a $5,000 guaranteed payment.
Requirements:
fill out the A&B Salon's Form 1065 for 2020 and Amy's K-1. Do not fill in any other schedules. Assume all the responses to Schedule B are no.
Additional Resources:
Form 1065 Instructions
Form 1065
Schedule K-1 Form 1065
Expert Answer:
AB Salon Form 1065 US Return of Partnership Income 2020 A Principal Business Activity Code PBAC Enter the appropriate code from the instructions Look ... View the full answer
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
