Comprehensive Problem $10-1$

Emily Jackson $($Social Security number $765-12-4326)$ and James Stewart $($Social Security number $466-74-9932)$ are partners in a partnership that owns and operates a barber shop. The partnership's first year of operation is $2022.$ Emily and James divide income and expenses equally. The partnership name is J&S Barbers, it is located at $1023$ Lexington Avenue, New York, NY $10128,$ and its Federal ID number is $95-6767676.$ The $2022$ financial statements for the partnership are presented below.

J&S Barbers Income Statement

for the Year Ending December $31,2022$

Gross income from operations $$349,000$

Interest income $1,000$

Deductions:

Salaries to employees $($includes guaranteed payments of $$10,000$ to Emily$)100,000$

Payroll taxes $11,000$

Supplies $7,900$

Rent $90,000$

Depreciation $32,100$

Short$-$term capital loss $2,000$

Non$-$deductible entertainment $3,000$

Charitable contributions $1,000$

Net income $$103,000$

Partners' withdrawals $($each partner$)$ $$50,000$

J&S Barbers Balance Sheet

as of December $31,2022$

Assets:

Cash $$92,000$

Leasehold improvements $$3,100$

Equipment $32,000$

Accumulated depreciation $(32,100)3,000$

$$95,000$

Liabilities and Capital:

Recourse long$-$term debt $$52,000$

Partners' capital $($$$20,000$ contributed by each partner$)43,000$

$$95,000$

Emily lives at $456$ E$.70$th Street, New York, NY $10006,$ and James lives at $436$ E$.63$rd Street, New York, NY $10012.$

Required:

Complete Form $1065$ and the accompanying K$-1$ forms. Do not complete Schedule D for the capital loss, Form $4562$ for depreciation, or Schedule B$-1$ related to ownership of the partnership.

Make realistic assumptions about any missing data.

If an amount box does not require an entry or the answer is zero, enter $"0".$

If required, round your answers to nearest dollar.

Enter amounts as positive numbers, except for a "loss". If required, enter a "loss" as a negative number on the tax form.

Assume all debt is recourse debt.