Prepare a partnership tax return. See data below. You will need the following forms: Form 1065 and corresponding schedules Schedule K-1 for Dr. Bailey (from problem C9-58) For the Schedule K-1. The filing center is Ogden, Utah. Individual taxpayer information Individual tax forms required: Schedule E Form 1040 Schedule A Form 8949 Form 4797 (see item 4.i. below) Schedule B Schedule D 1. Dr. Leisa Bailey's social security number is 456-12-3789. She is married but does not have any dependents. Her husband's name is Daniel Bailey and his social security number is 123- 45-6789 2. Additional information to complete the tax returns: Daniel works at Intel Corporation and earned $160,000 during 2017. b. His federal tax withholding $8,000. Leisa made federal estimated tax payments of $40,000 and Arizona estimated payments of $9,500 a. was $30,000 and his Arizona income taxes withheld were Mortgage interest on their personal residence was $15,200 and property taxes were $5,150 c. Additional charitable contributions of $2,750 were paid during the year. d. On July 10, 2017 they sold 100 shares of Intel Corporation stock for $70 per share They purchased the stock on May 1, 2012 for $56 per share e. The Taxpayer's have a long-term capital loss carry forward of $5,000 f. Assume AMT does not apply. g. Apply any refund to estimated tax payments for the next year h. Instead of preparing Form 4797, input any gain/loss from the Sec. 1231 asset on line 14 of form 1040 Healthwise Medical Supplies Company is located at 2400 Second Street, City, ST 12345 The company is a general partnership that uses the calendar year and accrual basis for both book and tax purposes. It engages in the development and sale of specialized surgical tools to hospitals. The employer identification number (EIN) is XX-2018016. The com- pany formed and began business on foreign dealings. The company is neither a tax shelter nor a publicly traded partnership The company has made no distributions other than cash, and no changes in ownership have occurred during the current year. Dr. Bailey is the Tax Matters Partner. The partner- ship makes no special elections. Table C:9-3 contains book balance sheet information at the beginning and end of the current year, and Table C:9-4 presents a book income state- ment for the current year. Other information follows: C:9-58 January 1, 2015. It has no foreign partners or other Information Two individuals formed the partnership First Pike, City, ST 12345) and Dr. Thomas J. Firth (3600 Third Blvd., City, ST 54321) For a 30% interest, Dr. Bailey contributed $600,000 cash. She is an active general partner who manages the company. For a 70% interest, Dr. Firth contributed $1.16 million cash and 1,000 shares of Fastgrowth, Inc. stock having fair market value (FMV) and a $48,000 adjusted basis. Dr. Firth is an active general part ner who designs and develops new contribution of stock at fair market value on Partnership Formation January 1, 2015: Dr. Leisa H. Bailey (1200 on at the time of contribution, a $240,000 products. For book purposes, the company recorded the Inventory and Cost of Goods Sold (Form 1125-A): The company uses the periodic inventory method and prices its inventory using the lower of FIFO cost or market. Only beginning inventory, ending inventory, and purchases should be reflected in Schedule A. No other costs or expenses are allocated to cost of goods sold. Note: the company is exempt from the uniform capitalization (UNICAP) rules because average gross income for the previous year was less than $10 million [Sec. 263A(b)(2) (B) ] Line 9 (a) (b)-(d) (e) & (f) Check (ii) Not applicable No Capital Gains and Losses (Schedule D): The company sold all 1,000 shares of the Fastgrowth, Inc. common stock on for $720,000. Dr. Firth acquired the stock on uted the stock to the company on July 2, 2016, Januar 2, 2013, for $48,000 and contrib- January 1, 2015, when its FMV was $240,000 TABLE C:9-3 Healthwise Medical Supplies Company-Book Balance Sheet Information January 1, 2016 Debit December 31, 2016 Credit Debit Credit Account Cash $ 233,500 540,000 $ 143,450 600,000 Accounts receivable Inventory Investment in municipal bonds Investment in corporate stock Equipment Accumulated depreciation- Equipment Accounts payable Notes payable (short-term) Accrued payroll expenses 1,000,000 40,000 240,000 1,000,000 1,200,000 40,000 -0- 1,400,000 $ 142,900 100,000 750,000 3,500 $ 787,800 130,000 150,000 5,250 Capital account balances: Dr. Leisa H. Bailey (30%) Dr. Thomas J. Firth (70%) 617,130 693,120 1,439,970 1,617,280 $3,383,450 $3,053,500 $3,053,500 $3,383,450 Totals V TABLE C:9-4 Healthwise Medical Supplies Company-Book Income Statement 2016 Sales $5,000,000 Returns and allowances (250,000) Net sales $4,750,000 $1,000,000 2,000,000 Beginning inventory Purchases Ending inventory Cost of goods soldi (1,200,000) (1,800,000) Gross profit Expenses: Depreciation (including Sec. 179) Repairs General insurance Guaranteed payment (to Dr. Bailey) Other salaries Travel Utilities $2,950,000 $ 644,900 32,500 35,000 100,000 700,000 20,000 60,000 150,000 Rent expense Advertising expense Professional fees 30,000 50,000 70,000 36,000 Employment taxes Business interest expense Investment expenses Investment interest expense 3,600 4,500 15,000 40,000 Meals and entertainment Charitable contributions (cash) Total expenses (1,991,500) Other income: Interest on municipal bonds Dividend income 1,600 13,200 Gain on stock sale: Selling price $720,000 (240,000) Book value Book gain 480,000 $1,453,300 Net income per books Fixed Assets and Depreciation (Form 4562): The company acquired the equipment on January 2, 2015, and placed it in service on that date. The equipment, which originally cost $1 million, is MACRS seven-year property. The company did not elect Sec. 179 expensing in the acquisition year and elected out of bonus depreciation. The company claimed the following depreciation on this property: Book and Regular Tax Depreciation AMT Depreciation Year $142,900 244,900 $107,100 191,300 2015 2016 On March 1, 2016, the company acquired and placed in service additional equipment costing $400,000. The company made the Sec. 179 expensing election for the entire cost of this new equipment. No depreciation or expensing is reported on Schedule A. Other Information: The company paid Dr. Bailey a $100,000 guaranteed payment for her management services The company made a $40,000 cash contribution to Fort Sanders Hospital System December 1 of the current year. on During the current year, the company made a $360,000 cash distribution to Dr. Bailey and a $840,000 cash distribution to Dr. Firth The municipal bonds, acquired in 2015, are bonds. Assume that no expenses of the company are allocable to the tax-exempt inter- est generated from the municipal bonds. Assume qualified production activities income (QPAI) equals $1.6 million. Employer's W-2 wages allocable to U.S. production activities equal $700,000. The company, being eligible small pass-through partnership, all method for reporting these activities (see discussion for Line 13d of Schedule K and Line 13 of Schedule K-1 in the Form 1065 instructions) general revenue bonds, not private-activity uses the small business simplification an Over Use book numbers for Schedule L, Schedule M-2, and Line 1 of Schedule M-1. Also use book numbers for Item L of Schedule K-1, and check the box for Sec. 704(b) book The partners share liabilities, which are recourse, in the same proportion ership percentages. Required: Prepare the 2016 partnership tax return (Form 1065), including the follow- ing additional schedules and forms: Schedule D, Form 4562, and Schedule K-1 Optional: Prepare a schedule for each partner's basis in his or her partnership interest. At January 1, 2016, Bailey's basis was as their own- $1,845,420 $873,180, and Firth's was Prepare a partnership tax return. See data below. You will need the following forms: Form 1065 and corresponding schedules Schedule K-1 for Dr. Bailey (from problem C9-58) For the Schedule K-1. The filing center is Ogden, Utah. Individual taxpayer information Individual tax forms required: Schedule E Form 1040 Schedule A Form 8949 Form 4797 (see item 4.i. below) Schedule B Schedule D 1. Dr. Leisa Bailey's social security number is 456-12-3789. She is married but does not have any dependents. Her husband's name is Daniel Bailey and his social security number is 123- 45-6789 2. Additional information to complete the tax returns: Daniel works at Intel Corporation and earned $160,000 during 2017. b. His federal tax withholding $8,000. Leisa made federal estimated tax payments of $40,000 and Arizona estimated payments of $9,500 a. was $30,000 and his Arizona income taxes withheld were Mortgage interest on their personal residence was $15,200 and property taxes were $5,150 c. Additional charitable contributions of $2,750 were paid during the year. d. On July 10, 2017 they sold 100 shares of Intel Corporation stock for $70 per share They purchased the stock on May 1, 2012 for $56 per share e. The Taxpayer's have a long-term capital loss carry forward of $5,000 f. Assume AMT does not apply. g. Apply any refund to estimated tax payments for the next year h. Instead of preparing Form 4797, input any gain/loss from the Sec. 1231 asset on line 14 of form 1040 Healthwise Medical Supplies Company is located at 2400 Second Street, City, ST 12345 The company is a general partnership that uses the calendar year and accrual basis for both book and tax purposes. It engages in the development and sale of specialized surgical tools to hospitals. The employer identification number (EIN) is XX-2018016. The com- pany formed and began business on foreign dealings. The company is neither a tax shelter nor a publicly traded partnership The company has made no distributions other than cash, and no changes in ownership have occurred during the current year. Dr. Bailey is the Tax Matters Partner. The partner- ship makes no special elections. Table C:9-3 contains book balance sheet information at the beginning and end of the current year, and Table C:9-4 presents a book income state- ment for the current year. Other information follows: C:9-58 January 1, 2015. It has no foreign partners or other Information Two individuals formed the partnership First Pike, City, ST 12345) and Dr. Thomas J. Firth (3600 Third Blvd., City, ST 54321) For a 30% interest, Dr. Bailey contributed $600,000 cash. She is an active general partner who manages the company. For a 70% interest, Dr. Firth contributed $1.16 million cash and 1,000 shares of Fastgrowth, Inc. stock having fair market value (FMV) and a $48,000 adjusted basis. Dr. Firth is an active general part ner who designs and develops new contribution of stock at fair market value on Partnership Formation January 1, 2015: Dr. Leisa H. Bailey (1200 on at the time of contribution, a $240,000 products. For book purposes, the company recorded the Inventory and Cost of Goods Sold (Form 1125-A): The company uses the periodic inventory method and prices its inventory using the lower of FIFO cost or market. Only beginning inventory, ending inventory, and purchases should be reflected in Schedule A. No other costs or expenses are allocated to cost of goods sold. Note: the company is exempt from the uniform capitalization (UNICAP) rules because average gross income for the previous year was less than $10 million [Sec. 263A(b)(2) (B) ] Line 9 (a) (b)-(d) (e) & (f) Check (ii) Not applicable No Capital Gains and Losses (Schedule D): The company sold all 1,000 shares of the Fastgrowth, Inc. common stock on for $720,000. Dr. Firth acquired the stock on uted the stock to the company on July 2, 2016, Januar 2, 2013, for $48,000 and contrib- January 1, 2015, when its FMV was $240,000 TABLE C:9-3 Healthwise Medical Supplies Company-Book Balance Sheet Information January 1, 2016 Debit December 31, 2016 Credit Debit Credit Account Cash $ 233,500 540,000 $ 143,450 600,000 Accounts receivable Inventory Investment in municipal bonds Investment in corporate stock Equipment Accumulated depreciation- Equipment Accounts payable Notes payable (short-term) Accrued payroll expenses 1,000,000 40,000 240,000 1,000,000 1,200,000 40,000 -0- 1,400,000 $ 142,900 100,000 750,000 3,500 $ 787,800 130,000 150,000 5,250 Capital account balances: Dr. Leisa H. Bailey (30%) Dr. Thomas J. Firth (70%) 617,130 693,120 1,439,970 1,617,280 $3,383,450 $3,053,500 $3,053,500 $3,383,450 Totals V TABLE C:9-4 Healthwise Medical Supplies Company-Book Income Statement 2016 Sales $5,000,000 Returns and allowances (250,000) Net sales $4,750,000 $1,000,000 2,000,000 Beginning inventory Purchases Ending inventory Cost of goods soldi (1,200,000) (1,800,000) Gross profit Expenses: Depreciation (including Sec. 179) Repairs General insurance Guaranteed payment (to Dr. Bailey) Other salaries Travel Utilities $2,950,000 $ 644,900 32,500 35,000 100,000 700,000 20,000 60,000 150,000 Rent expense Advertising expense Professional fees 30,000 50,000 70,000 36,000 Employment taxes Business interest expense Investment expenses Investment interest expense 3,600 4,500 15,000 40,000 Meals and entertainment Charitable contributions (cash) Total expenses (1,991,500) Other income: Interest on municipal bonds Dividend income 1,600 13,200 Gain on stock sale: Selling price $720,000 (240,000) Book value Book gain 480,000 $1,453,300 Net income per books Fixed Assets and Depreciation (Form 4562): The company acquired the equipment on January 2, 2015, and placed it in service on that date. The equipment, which originally cost $1 million, is MACRS seven-year property. The company did not elect Sec. 179 expensing in the acquisition year and elected out of bonus depreciation. The company claimed the following depreciation on this property: Book and Regular Tax Depreciation AMT Depreciation Year $142,900 244,900 $107,100 191,300 2015 2016 On March 1, 2016, the company acquired and placed in service additional equipment costing $400,000. The company made the Sec. 179 expensing election for the entire cost of this new equipment. No depreciation or expensing is reported on Schedule A. Other Information: The company paid Dr. Bailey a $100,000 guaranteed payment for her management services The company made a $40,000 cash contribution to Fort Sanders Hospital System December 1 of the current year. on During the current year, the company made a $360,000 cash distribution to Dr. Bailey and a $840,000 cash distribution to Dr. Firth The municipal bonds, acquired in 2015, are bonds. Assume that no expenses of the company are allocable to the tax-exempt inter- est generated from the municipal bonds. Assume qualified production activities income (QPAI) equals $1.6 million. Employer's W-2 wages allocable to U.S. production activities equal $700,000. The company, being eligible small pass-through partnership, all method for reporting these activities (see discussion for Line 13d of Schedule K and Line 13 of Schedule K-1 in the Form 1065 instructions) general revenue bonds, not private-activity uses the small business simplification an Over Use book numbers for Schedule L, Schedule M-2, and Line 1 of Schedule M-1. Also use book numbers for Item L of Schedule K-1, and check the box for Sec. 704(b) book The partners share liabilities, which are recourse, in the same proportion ership percentages. Required: Prepare the 2016 partnership tax return (Form 1065), including the follow- ing additional schedules and forms: Schedule D, Form 4562, and Schedule K-1 Optional: Prepare a schedule for each partner's basis in his or her partnership interest. At January 1, 2016, Bailey's basis was as their own- $1,845,420 $873,180, and Firth's was