49. L0.7, 8, 9 The KL Partnership is owned equally by Kayla and Lisa. At the beginning

of the year, Kayla's basis is $20,000 and Lisa's basis is $16,000. Partnership

debt did not change from the beginning to the end of the tax year. KL reported the

following income and expenses for the current tax year:

Sa les revenue $150,000

Cost of sales $80,000

Distribution to Lisa $15,000

Depreciation expense $ 20,000

Utilit ies $14,000

Rent expense $18,000

Long-term capital gain $6,000

Payment to Mercy Hospita l fo r Kayla's medica l expenses $12,000

a. Prepare a Microsoft Excel spreadsheet that could be used in a CPA firm to

accumulate KL's information that would be reported on Form 1065, page 1

[Ordinary business income (loss)) and page 4 (Schedule K). Include calculations

and subtotals to ensure the spreadsheet will automatically update if the information

changes. How much is the partnership's ordinary income on page 1.

What information is shown on Schedule K?

b. Use the information in part (a) to prepare Form 1065, pages 1 and 4 (Schedule K)

for the KL Partnership. On page 1, omit items A to J at the top if the facts do

not provide that information. For Schedule K, line 14, assume both partners are

active in the partnership.

c. Add columns to your spreadsheet to allocate amounts to Kayla and Lisa. (For

this requirement, disregard the income from self-employment and information

related to the qualified business income deduction.) Show the partners' allocation

percentages at the top of their columns, and use those percentages in

formulas to allocate any separately stated items that should be allocated. (note

that some items are directly assigned to a partner.) What information will be

shown on Kayla's and Lisa's Schedules K- 1, Part III? What items will Kayla and

Lisa report on their Federal income tax returns?

d. Expand your spreadsheet. Add rows for beginning basis and ending basis below

Kayla's and Lisa's columns, and calculate their ending basis in the partnership

interests. How do you make this calculation? What is each partner's basis in her

partnership interest at the end of the tax year