Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current year. Aaron and Deanne each contributed $110,000, and Keon transferred an acre of undeveloped land to the partnership. The land had a tax basis of $70,000 and was appraised at $180,000. The land was also encumbered with a $70,000 nonrecourse mortgage for which no one was personally liable. All three partners agreed to split profits and losses equally. At the end of the first year, Blue Bell made a $7,000 principal payment on the mortgage. For the first year of operations, the partnership records disclosed the following information:

Sales revenue	$ 470,000
Cost of goods sold	410,000
Operating expenses	70,000
Long-term capital gains	2,400
1231 gains	900
Charitable contributions	300
Municipal bond interest	300
Salary paid as a guaranteed payment to Deanne (not included in expenses)	3,000

Form 1065 (2021)							Page 4
Schedule K	Partners' Distributive Share Items					Total amount
	1 Ordinary business income (loss) (page 1, line 22)					1
	2 Net rental real estate income (loss) (attach Form 8825)					2
	3a Other gross rental income (loss)			3a
	b Expenses from other rental activities (attach statement)			3b
	c Other net rental income (loss). Subtract line 3b from line 3a					3c
	4 Guaranteed payments:					4
			a Services	4a
			b Capital	4b
	c Total. Add lines 4a and 4b					4c	0
	5 Interest income					5
Income (Loss)	6 Dividends and dividend equivalents:		a Ordinary dividends			6a
			b Qualified dividends	6b
			c Dividend equivalents	6c
	7 Royalties					7
	8 Net short-term capital gain (loss) (attach Schedule D (Form 1065))					8
	9a Net long-term capital gain (loss) (attach Schedule D (Form 1065))					9a
	b Collectibles (28%) gain (loss)			9b
	c Unrecaptured section 1250 gain (attach statement)			9c
	10 Net section 1231 gain (loss) (attach Form 4797)					10
	11 Other income (loss) (see instructions) Type					11
	12 Section 179 deduction (attach Form 4562)					12
	13a Contributions					13a
Deductions	b Investment interest expense					13b
	c Section 59(e)(2) expenditures: (1) Type				(2) Amount	13c(2)
	d Other deductions (see instructions) Type				(2) Amount	13d
	14a Net earnings (loss) from self-employment					14a
Self-Employment	b Gross farming or fishing income					14b
	c Gross nonfarm income					14c
	15a Low-income housing credit (section 42(j)(5))					15a
	b Low-income housing credit (other)					15b
Credits	c Qualified rehabilitation expenditures (rental real estate) (attach Form 3468, if applicable)					15c
	d Other rental real estate credits (see instructions)		Type			15d
	e Other rental credits (see instructions)		Type			15e
	f Other credits (see instructions)		Type			15f
International Transactions	16 Attach Schedule K-2 (Form 1065), Partners Distributive Share Items-International, and check this box to indicate that you are reporting items of international tax relevancecheckbox unchecked1 of 5
	17a Post-1986 depreciation adjustment					17a
Alternative	b Adjusted gain or loss					17b
Minimum Tax	c Depletion (other than oil and gas)					17c
(AMT) Items	d Oil, gas, and geothermal propertiesgross income					17d
	e Oil, gas, and geothermal propertiesdeductions					17e
	f Other AMT items (attach statement)					17f
	18a Tax-exempt interest income					18a
	b Other tax-exempt income					18b
	c Nondeductible expenses					18c
Other	19a Distributions of cash and marketable securities					19a
Information	b Distributions of other property					19b
	20a Investment income					20a
	b Investment expenses					20b
	c Other items and amounts (attach statement)
	21 Total foreign taxes paid or accrued					21