Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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:

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

Using the information generated in answering parts (a) and (b), prepare Blue Bells page 1 and Schedule K and K-1 to be included with its Form 1065 for its first year of operations. \

Enter the required values in the appropriate fields of Form 1065 and Schedule K and K-1

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing That Matters Case Studies Discussion Guide

Authors: Norman Marks

1st Edition

B089J5JCL2, 979-8650410546

More Books

Students also viewed these Accounting questions