Question
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
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 (Do not round intermediate calculations. Round our final answers to the nearest whole dollar amount. Negative amounts should be entered with a minus sign. Leave no answer blank. Enter zero if applicable.)
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
prepare Blue Bells page 1 and Schedule K to be included with its Form 1065 for its first year of operations, along with Schedule K-1 for Deanne.
(Use 2020 tax rules regardless of year on tax form. Percentages should be rounded to two decimal places. Losses should be entered as negative numbers and input all other values as positive numbers.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started