ACCOUNTING $452$ TAX ACCOUNTING II

PREPARE PARTNERSHIP RETURN ASSIGNMENT INFORMATION

The four entities shown in the table below decided to form Residential Homes

Construction, L$.$L$.$C$.$ partnership on April $1,2023.$

PARTNER NAME ENTITY TYPE TAX ID

NUMBER

PARTNERSHIP

OWNERSHIP

PERCENTAGE

Byrd Construction Inc. $($S$)$ Corporation $22-678345550\%$

Dream Homes Construction Sole Proprietorship $156-45-890710\%$

Regency Homes Corporation $($Regular$)22-789033420\%$

Tinker Partners, LTD Partnership $22-673456920\%$

The partnership office will be located at $945$ Main Street Cleveland, Mississippi.

Its taxpayer ID number will be $22-3335678.$

The official representative of the partnership will be Mrs$.$ Kehlia Byrd: who lives

at $234$ Sunnyside Lane in Cleveland Mississippi.

Each partners role in the management of the new partnership as well as other

income sharing information is shown in the table below:

PARTNER NAME PARTNER

TYPE

INCOME

ALLOCATION

LOSS

ALLOCATION

Byrd Construction Inc. General $55\%35\%$

Dream Homes Construction General $5\%5\%$

Regency Homes Limited $20\%30\%$

Tinker Partners, LTD General $20\%30\%$

$2$

Each partner exchanged the following assets for their ownership in the new

partnership. Note all four partners contributed its assets on the same day and

the entire asset transfer of all four of the partners was considered one

transaction.

Byrd Construction Inc: $$200,000$ in cash and professional consulting services

valued at $$400,000.$ A note payable in the amount of $$100,000,$ payable in $10$

monthly installments, starting on June $1,2023,$ with each monthly payment being

$$10,050\mathrm{.}00.$

Dream Home Construction: Professional carpenter services valued at $$100,000.$

Regency Homes: Land with a cost basis of $$170,000$ and a fair market value of

$$200,000.$

Tinker Partners, LTD: Construction equipment with a net book value of $$70,000$

and a fair market value of $$100,000.$

Assignment $1$ A: Please prepare the journal entry needed to record the

formation of the partnership:

ACCOUNT NAME DR$.$ CR$.$

$3$

Assignment $2$ A: Please provide the information needed to complete the table

below:

For each partner; determine if their exchange of assets to form the partnership was

tax free or not. Indicate by entering the word yes or no for each partner.

PARTNER NAME Tax Free

Exchange?

Byrd Construction Inc.

Dream Homes Construction

Regency Homes

Tinker Partners, LTD

Assignment $2$ B: Calculate each partners$$ basis in the partnership by entering

the information requested in the table below;

NAME Basis of

Property

transferred

FMV of

property

transferred

Boot

Received

Realized

Gain

Recognized

Gain

Basis

$-$ A B C D E F

$----$ B $+$ C $-$ A Lesser of C or D A $$ C $+$ E

Byrd Construction

Dream Homes

Regency Homes

Tinker Partners

$4$

Assignment $2$ C: Please prepare the opening trial balance of the partnership:

Residential Homes Construction, L$.$L$.$C

Trial Balance

April $1,2023$

ACCOUNT NAME DR$.$ CR$.$

TOTAL:

$5$

Assignment $3$: Prepare partnership $1065$ for year ended December $31,2023$

using the revenue and expense information shown below:

You are not required to complete Schedule L on page $6$:

Description Amount

Home Sales Revenue $$2,600,000$

Guaranteed payments to partners $($capital$)$ $$60,000$

Guaranteed payments to partners $($service$)$ $$240,000$

Employee salaries and wages $$200,000$

Rent $$60,000$

Taxes and licenses $$12,000$

Interest $$40,000$

Depreciation $$20,000$

Employee Retirement plan contributions $$50,000$

Employee Benefit Programs $$80,000$

Professional consulting services $$400,000$

Professional carpentry services $$100,000$

Building Supplies $$738,000$

The following guaranteed payments were made to partners:

Partner Name Guaranteed

payments based on

capital

Guaranteed

payments based

on Services

Total guaranteed

payments

Byrd Construction $$15,000$ $$60,000$ $$75,000$

Dream Homes $$15,000$ $$60,000$ $$75,000$

Regency Homes $$15,000$ $$60,000$ $$75,000$

Tinker Partners, LTD $$15,000$ $$60,000$ $$75,000$

$----$

TOTAL $$60,000$ $$240,000$ $$300,000$

$6$

The following distribution were made to partners: $($all normal distributions$).$

Partner Name Cash Other Total amount

distributed

Byrd Construction $$150,000-$ $$150,000$

Dream Homes $$30,000-$ $$30,000$

Regency Homes $$60,000-$ $$60,000$

Tinker Partners, LTD $$60,000-$ $$60,000$

$----$