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 2010. Emily and James divide income and expenses equally. The partnership name is J&S Barbers, it is located at 1023 Broadway, New York, NY 10004, and its Federal ID number is 95-676767. The 2010 financial statements for the partnership are presented below.

Emily lives at 456 E. 70th Street, New York, NY 10006, and James lives at 436 E.
63rd Street, New York, NY 10012.
Required: Complete Emily’s and James’ Form 1065, Schedules K-1, and any other appropriate schedule(s) you need from pages 10-27 to 10-36 to complete J&S Barbers’ tax return.
Do not fill in Schedule D, for the capital gain, or Form 4562, for depreciation. Make realistic assumptions about any missing data.

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J&S Barbers Income Statement for the Year Ended December 31, 2010 Gross income from operations Deductions: Salaries to employees Payroll taxes Supplies Rent Depreciation Long-term capital loss Charitable contributions Net income Partners' withdrawals (each partner) J&S Barbers Balance Sheet as of December 31, 2010 Assets: Cash Accounts receivable Equipment Accum. depreciation Liabilities and Capital: Accounts payable Notes payable Partners' capital ($20,000 contributed by each partner) $371,600 94,000 10,000 9,000 45,000 5,100 2,000 500 $206,000 $ 80,000 $100,850 10,000 $32,000 (5,100) 26,900 $137,750 $ 29,750 22,000 86,000 $137,750