Partnership Tax Return Information Required Using the information provided below, complete Bent Creek Dental's Form 1065 and Schedule D for tax year 2023 Also, complete Josh Mathis and Mary Margaret Mathis's Schedule K 1 Form 4562 for depreciation is not required Use the amount of tax depreciation and Sec 179 expense provided in the income statement and the information in 4 below to complete the appropriate lines on the first page of Schedule K of Form 1065 Form 4797 for the sale of trade or business property is not required Use the amount of gain and loss from the sale of the computers and furniture in the income statement and the information provided in 4 and 5 below to complete the appropriate lines on the first page of Schedule K of Form 1065 If any information is missing, use reasonable assumptions to fill in any gaps The forms, schedules, and instructions can be found at the IRS website (www irs gov) The instructions can be helpful in completing the forms Facts On January 1, 2011, two enterprising dentists in the community, Josh Mathis and Mary Margaret Mathis, anticipated a boom in the local dental industry They decided to sell their small businesses and pool their resources as general partners in establishing a dental office Their general partnership was officially formed under the name Bent Creek Dental ( BCD ) and soon became a thriving business BCD is located at 2311 Bent Creek Rd, Ste 500, Auburn, AL 36830 BCD's Employer Identification Number is 91 3697984 BCD's business activity is dentistry Its business activity code is 621210 Both general partners are active in the management of BCD Josh Mathis's social security number is 500 23 4976 Josh's address is 31 W Oak Drive, Auburn, AL 36830 Mary Margaret Mathis's social security number is 374 68 3842 Mary Margaret's address is 947 E Linder Street, Auburn, AL 36830 BCD uses the accrual method of accounting and has a calendar year end 2 The following is BCD's 2023 income statement BCD Income Statement For the year ended December 31, 2023 Sales (on account) $600,000 Less Sales Returns 20,000 $580,000 Cost of goods sold 160,000 Gross profit on sales $420,000 Operating expenses Salaries and wages (including partners' guaranteed payments) $95,000 Property taxes 1,800 Payroll taxes 3,450 Depreciation and 179 expense 43,335 Advertising 2,500 Bad debt expense 4550 Office expense 1,900 Repairs 1,850 Miscellaneous 430 Fire insurance 4,650 159,465 Net operating income $260,535 Other income Gain on sale of securities $250 Gain on sale of computers 16,700 Dividend income 3 495 Interest income 4,660 22,105 Other deductions Interest on mortgage $6,600 Interest on notes payable 3,250 Charitable contributions 5,200 Life insurance premiums 3,500 Loss on sale of office furniture 555 $19,105 NET INCOME $263,535 Notes 1 The partnership maintains its books according to IRC Sec 704(b) regulations Under this method of accounting, all book and tax numbers are the same except for life insurance premiums and tax exempt interest 2 The partners' percentage ownership of original contributed capital is 30 percent for Josh and 70 percent for Mary Margaret They agree that profits and losses will be shared according to this same ratio Any additional capital contributions and withdrawals must be made in these same ratios 3 For their services to the company, the partnerships receive the following annual guaranteed payments Josh Mathis $32,000 Mary Margaret Mathis $18,000 4 Two pieces of office furniture sold in September 2022 The old furniture was purchased new four years ago Two new pieces of office furniture were purchased on September 1, 2023 for $26,321 and the partnership intends to immediately expense them under Sec 179 (see depreciation and 179 in the income statement above) 5 The computers sold this year was purchased several years ago $16,500 of the total gain from the sale of the computers should be recaptured as ordinary income under IRC Sec 1245 6 The partnership uses currently allowable tax depreciation methods for both regular tax and book purposes and has adopted a policy of electing not to claim bonus depreciation Assume alternative minimum tax depreciation equals regular tax depreciation 7 The partners decided to invest in a small tract of land with the intention of selling it about a year later at a substantial profit On January 1, 2023, they executed a $55,000 note with the bank to obtain the $75,000 cash purchase price Interest on the note is payable yearly, and the principal 4 is due in 18 months The first interest payment of $3,250 was made on December 30, 2023 (see interest on notes payable in income statement above) 8 The note payable to the bank as well as the accounts payable are treated by the partnership as recourse debt Assume the total recourse debt is allocated $22,500 to Josh and $52,500 to Mary Margaret 9 Some years after the partnership was formed, a mortgage of $114,500 was obtained on the land and building from Commerce State Bank Principal payments of $5,500 must be paid each December 31, along with interest on the outstanding balance (see interest on mortgage income statement above) The holder of the note agreed therein to look only to the land and building for his security in the event of default 10 The partnership values its inventory at lower of cost or market and uses the FIFO inventory method Assume the rules of Sec 263A do not apply to BCD 11 During the year, the partnership bought 300 shares of JKL, Ltd , for $6,650 on February 8, 2023 All the shares were sold for $6,100 on April 2, 2023 ABS received a Form 1099 B indicating that the basis of the JKL shares was reported to the IRS 12 Two hundred shares of QRS Corporation were sold for $8,300 on September 13, 2023 The stock was purchased on December 1, 2016 and is not eligible for the 28 percent capital gains rate BCD reported a Form 1099 B indicating that the basis of the QRS shares was reported to the IRS 13 The following dividends were received QRS (qualified) $300 JKL, Ltd (not qualified) 195 Total $495 14 The partnership received interest income from the following sources Interest on Alabama municipal bonds $3,600 Interest on savings 660 Interest on accounts receivable 400 Total $4,660 15 The partnership donated $5,200 cash to the Red Cross 16 Life insurance policies on the lives of Josh and Mary Margaret were purchased in the prior year The partnership will pay all the premiums and is the beneficiary of the policy The premiums for the current year were $3,500 (see income statement above) and no cash surrender value exists for the first or second year of the policy 17 The partners withdrew the following cash amounts from the partnership during the year (in addition to the guaranteed payments) Josh $28,748 Mary Margaret $49,112 5 The following are BCD's balance sheets as of January 1, 2023, and December 31, 2023 BCD Balance Sheets 12 31 2023 1 1 2023 Assets Cash $170,466 $43,042 Accounts receivable 76,000 57,000 Inventories 60,000 50,000 Investment in municipal bonds 50,000 50,000 Investment in QRS common stock 42,500 50,000 Computers $16,500 Less Accum Depr 13,649 2,851 Office Furniture $68,000 $50,000 Less Accum Depr 60,697 7,303 34,376 15,624 Building $120,000 $120,000 Less Accum Depr 39,874 80,126 36,798 83,202 Land 90,000 15,000 TOTALS $576,395 $366,719 Liabilities and capital Accounts payable $20,000 $45,500 Notes payable 55,000 Mortgage payable 62,000 67,500 Capital Josh Mathis 132,353 82,040 Mary Margaret Mathis 307,042 171,679 TOTALS $576,395 $366,719 Instructions Complete the return by hand Round all dollar amounts to the nearest whole number Do not use zeros or dashes to fill in lines for which there is not any amount Just leave them blank Complete the headings (name, ssn, etc ) for each form schedule Answer all questions on each form schedule You may make up your own answer if it is not clear from the given information in the textbook Prepare a schedule of supporting computations Leave a trail Document any calculations made to prepare the tax return Use a numbering system to identify each line of the form schedule for which there is a related supporting computation Please prepare all forms, schedules, worksheets, and supporting material neatly Pretend you are being paid to prepare this return for a client Include a cover page Please create a fake accounting firm team name, using the last names (in alphabetical order) of each team member on you cover page Scan all documents and upload to the Tax Return 2 Assignment on Canvas Required Tax Forms You may need the following forms schedules for tax year 2023 and additional forms as required (available at www irs govLinks to an external site ) Form 1065 (all 5 pages) Schedule K 1 (One for each partner) Form 1125 A Schedule B 1 (Form 1065) Schedule D (Form 1065)

Question

Partnership Tax Return Information  Required  Using the information provided below, complete Bent Creek Dental's Form 1065 and Schedule D for tax year 2023  Also, complete Josh Mathis and Mary Margaret Mathis's Schedule K 1  Form 4562 for depreciation is not required  Use the amount of tax depreciation and Sec  179 expense provided in the income statement and the information in  4 below to complete the appropriate lines on the first page of Schedule K of Form 1065  Form 4797 for the sale of trade or business property is not required  Use the amount of gain and loss from the sale of the computers and furniture in the income statement and the information provided in  4 and  5 below to complete the appropriate lines on the first page of Schedule K of Form 1065  If any information is missing, use reasonable assumptions to fill in any gaps  The forms, schedules, and instructions can be found at the IRS website (www irs gov)  The instructions can be helpful in completing the forms  Facts  On January 1, 2011, two enterprising dentists in the community, Josh Mathis and Mary Margaret Mathis, anticipated a boom in the local dental industry  They decided to sell their small businesses and pool their resources as general partners in establishing a dental office  Their general partnership was officially formed under the name Bent Creek Dental ( BCD ) and soon became a thriving business  BCD is located at 2311 Bent Creek Rd, Ste 500, Auburn, AL 36830 BCD's Employer Identification Number is 91 3697984  BCD's business activity is dentistry  Its business activity code is 621210  Both general partners are active in the management of BCD  Josh Mathis's social security number is 500 23 4976  Josh's address is 31 W  Oak Drive, Auburn, AL 36830 Mary Margaret Mathis's social security number is 374 68 3842  Mary Margaret's address is 947 E  Linder Street, Auburn, AL 36830 BCD uses the accrual method of accounting and has a calendar year end  2 The following is BCD's 2023 income statement  BCD Income Statement For the year ended December 31, 2023 Sales (on account) $600,000 Less  Sales Returns  20,000 $580,000 Cost of goods sold  160,000 Gross profit on sales $420,000 Operating expenses  Salaries and wages (including partners' guaranteed payments) $95,000 Property taxes 1,800 Payroll taxes 3,450 Depreciation and 179 expense 43,335 Advertising 2,500 Bad debt expense 4550 Office expense 1,900 Repairs 1,850 Miscellaneous 430 Fire insurance 4,650 159,465 Net operating income $260,535 Other income  Gain on sale of securities $250 Gain on sale of computers 16,700 Dividend income 3 495 Interest income 4,660 22,105 Other deductions  Interest on mortgage $6,600 Interest on notes payable 3,250 Charitable contributions 5,200 Life insurance premiums 3,500 Loss on sale of office furniture 555 $19,105 NET INCOME $263,535 Notes  1  The partnership maintains its books according to IRC Sec  704(b) regulations  Under this method of accounting, all book and tax numbers are the same except for life insurance premiums and tax exempt interest  2  The partners' percentage ownership of original contributed capital is 30 percent for Josh and 70 percent for Mary Margaret  They agree that profits and losses will be shared according to this same ratio  Any additional capital contributions and withdrawals must be made in these same ratios  3  For their services to the company, the partnerships receive the following annual guaranteed payments  Josh Mathis $32,000 Mary Margaret Mathis $18,000 4  Two pieces of office furniture sold in September 2022  The old furniture was purchased new four years ago  Two new pieces of office furniture were purchased on September 1, 2023 for $26,321 and the partnership intends to immediately expense them under Sec  179 (see depreciation and 179 in the income statement above)  5  The computers sold this year was purchased several years ago  $16,500 of the total gain from the sale of the computers should be recaptured as ordinary income under IRC Sec  1245  6  The partnership uses currently allowable tax depreciation methods for both regular tax and book purposes and has adopted a policy of electing not to claim bonus depreciation  Assume alternative minimum tax depreciation equals regular tax depreciation  7  The partners decided to invest in a small tract of land with the intention of selling it about a year later at a substantial profit  On January 1, 2023, they executed a $55,000 note with the bank to obtain the $75,000 cash purchase price  Interest on the note is payable yearly, and the principal 4 is due in 18 months  The first interest payment of $3,250 was made on December 30, 2023 (see interest on notes payable in income statement above)  8  The note payable to the bank as well as the accounts payable are treated by the partnership as recourse debt  Assume the total recourse debt is allocated $22,500 to Josh and $52,500 to Mary Margaret  9  Some years after the partnership was formed, a mortgage of $114,500 was obtained on the land and building from Commerce State Bank  Principal payments of $5,500 must be paid each December 31, along with interest on the outstanding balance (see interest on mortgage income statement above)  The holder of the note agreed therein to look only to the land and building for his security in the event of default  10  The partnership values its inventory at lower of cost or market and uses the FIFO inventory method  Assume the rules of Sec  263A do not apply to BCD  11  During the year, the partnership bought 300 shares of JKL, Ltd , for $6,650 on February 8, 2023  All the shares were sold for $6,100 on April 2, 2023  ABS received a Form 1099 B indicating that the basis of the JKL shares was reported to the IRS  12  Two hundred shares of QRS Corporation were sold for $8,300 on September 13, 2023  The stock was purchased on December 1, 2016 and is not eligible for the 28 percent capital gains rate  BCD reported a Form 1099 B indicating that the basis of the QRS shares was reported to the IRS  13  The following dividends were received  QRS (qualified) $300 JKL, Ltd  (not qualified) 195 Total $495 14  The partnership received interest income from the following sources  Interest on Alabama municipal bonds $3,600 Interest on savings 660 Interest on accounts receivable 400 Total $4,660 15  The partnership donated $5,200 cash to the Red Cross  16  Life insurance policies on the lives of Josh and Mary Margaret were purchased in the prior year  The partnership will pay all the premiums and is the beneficiary of the policy  The premiums for the current year were $3,500 (see income statement above) and no cash surrender value exists for the first or second year of the policy  17  The partners withdrew the following cash amounts from the partnership during the year (in addition to the guaranteed payments)  Josh $28,748 Mary Margaret $49,112 5 The following are BCD's balance sheets as of January 1, 2023, and December 31, 2023  BCD Balance Sheets 12 31 2023 1 1 2023 Assets Cash $170,466 $43,042 Accounts receivable 76,000 57,000 Inventories 60,000 50,000 Investment in municipal bonds 50,000 50,000 Investment in QRS common stock 42,500 50,000 Computers $16,500 Less  Accum  Depr  13,649 2,851 Office Furniture $68,000 $50,000 Less  Accum  Depr  60,697 7,303 34,376 15,624 Building $120,000 $120,000 Less  Accum  Depr  39,874 80,126 36,798 83,202 Land 90,000 15,000 TOTALS $576,395 $366,719 Liabilities and capital Accounts payable $20,000 $45,500 Notes payable 55,000 Mortgage payable 62,000 67,500 Capital  Josh Mathis 132,353 82,040 Mary Margaret Mathis 307,042 171,679 TOTALS $576,395 $366,719 Instructions  Complete the return by hand Round all dollar amounts to the nearest whole number  Do not use zeros or dashes to fill in lines for which there is not any amount  Just leave them blank  Complete the headings (name, ssn, etc ) for each form schedule  Answer all questions on each form schedule  You may make up your own answer if it is not clear from the given information in the textbook  Prepare a schedule of supporting computations Leave a  trail   Document any calculations made to prepare the tax return  Use a numbering system to identify each line of the form schedule for which there is a related supporting computation  Please prepare all forms, schedules, worksheets, and supporting material neatly  Pretend you are being paid to prepare this return for a client  Include a cover page   Please create a fake accounting firm team name, using the last names (in alphabetical order) of each team member on you cover page  Scan all documents and upload to the  Tax Return  2  Assignment on Canvas  Required Tax Forms  You may need the following forms schedules for tax year 2023 and additional forms as required (available at www irs govLinks to an external site  )  Form 1065 (all 5 pages) Schedule K 1 (One for each partner) Form 1125 A Schedule B 1 (Form 1065) Schedule D (Form 1065)

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Question: Partnership Tax Return Information: Required: Using the information provided below, complete Bent Creek Dental's Form 1065 and Schedule D for tax year 2023. Also, complete

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