Automatic Zoom APPENDIX E Practice Set A ensive Tax Return Problems January 1, 2018 300,000 $ 233,880 40,000 200,000 500,000 Other current liabilities Mortgages Capital stock Retained earmings 80,300 210,000 500,000 1,272,900 $2,363,200 Total liabilities and equity $2,564,100 ing 2018, Kingfisher made estimated tax payments of $27,000 each quarter to the IRS. Prepare a Form 1120 for Kingfisher for tax year 2018 (if the final 2018 Form 1120 is not available, see if a draft 2018 Form 1120 is available on the IRS website). PROBLEM 5-PARTNERSHIP (FORM 1065) 1. Ryan Ross (111-11-1112), Oscar Omega (222-22-2222), Clark Carey (333-33-3333), and Kim Kardigan 444-44-4444) are equal active members in ROCK the Ages LIC. ROCK serves as agent and manager for prominent musicians in the Los Angeles area. The LLC's Federal ID number is 55-5555555. It uses the cash basis and the calendar year and began operations on January 1, 2005. Its current address is 6102 Wilshire Boulevard, Suite 2100, Los Angeles, CA 90036. ROCK was the force behind such music icons as Rhiannon, Burgundy Six, Elena Gomez. Tyler Quick, Queen Bey and Bruno Mercury and has had a very profitable year. The following information was taken from the LLC's income statement for the current year Revenues $4,800,000 1,600 3,200 4,000 $4,808,800 Fees and commissions Taxable interest income from bank deposits Tax-exempt interest Net gain on stock sales Total revenues Expenses S 380,000 28,000 20,000 1,000,000 Advertising and public relations Charitable contributions Section 179 expense Employee W-2 wages Guaranteed payment (services), Ryan Ross, office manager Guaranteed payment (services), other members Business meals subject to 50% disallowance Travel Legal and accounting fees Office rentals paid Interest expense on operating line of credit Insurance premiums Office expense Payroll taxes Utilities 800,000 600,000 200,000 320,000 132,000 80,000 10,000 52,000 200,000 92,000 54,800 $3,968,800 Total expenses APPENDIX E Practice Set Assignments-Comprehensive Tax Retun Problems During the past couple of years, ROCK has taken advantage of bonus depreciation and 179 deductions and fully remodeled the premises and upgraded its lease. hold improvements. This year, ROCK wrapped up its remodel with the purchase of $20,000 of office furniture for which it will claim a $ 179 deduction. (For simplicity assume that ROCK uses the same cost recovery methods for both tax and financial purposes) There is no depreciation adjustment for alternative minimum tax pur- poses. While the property, is fully depreciated, it is not beyond the end of its depre- ciable life for purposes of the qualified business income deduction ROCK invests much of its excess cash in non-dividend-paying growth stocks and tax-exempt securities. During the year, the LLC sold two securities. On June 15, ROCK purchased 1,000 shares of Tech, Inc. stock for $100,000; it sold those shares on December 15, for $80,000. On March 15 of last year, ROCK purchased 2,000 shares of Biolabs, Inc. stock for $136,000, it sold those shares for $160,000 on December 15 of the current year. These transactions were reported to the IRS on Forms 1099-B, ROCK's basis in these shares was reported Net income per books is $840,000. On January 1, the members capital accounts equaled $200,000 each. No additional capital contributions were made this year In addition to their guaranteed payments, each member withdrew $250,000 cash during the year. The LLC's balance sheet as of December 31 of this year is as follows Ending Beginning s 444.000 120,000 436,000 960.000 (960,000) $1,000,000 $ 200,000 200000 200,000 200,000 200,000 Cash Tax-exempt securities Marketable securities Leasehold improvements, furniture, and equipment Accumulated depreciation 120,000 300,000 980,000 (980,000) Total assets s 160.000 Operating line of credit Capital, Ross Capital, Omega Capital, Carey Capital Kardigan fotal liabilities and capital Automatic Zoom APPENDIX E Practice Set A ensive Tax Return Problems January 1, 2018 300,000 $ 233,880 40,000 200,000 500,000 Other current liabilities Mortgages Capital stock Retained earmings 80,300 210,000 500,000 1,272,900 $2,363,200 Total liabilities and equity $2,564,100 ing 2018, Kingfisher made estimated tax payments of $27,000 each quarter to the IRS. Prepare a Form 1120 for Kingfisher for tax year 2018 (if the final 2018 Form 1120 is not available, see if a draft 2018 Form 1120 is available on the IRS website). PROBLEM 5-PARTNERSHIP (FORM 1065) 1. Ryan Ross (111-11-1112), Oscar Omega (222-22-2222), Clark Carey (333-33-3333), and Kim Kardigan 444-44-4444) are equal active members in ROCK the Ages LIC. ROCK serves as agent and manager for prominent musicians in the Los Angeles area. The LLC's Federal ID number is 55-5555555. It uses the cash basis and the calendar year and began operations on January 1, 2005. Its current address is 6102 Wilshire Boulevard, Suite 2100, Los Angeles, CA 90036. ROCK was the force behind such music icons as Rhiannon, Burgundy Six, Elena Gomez. Tyler Quick, Queen Bey and Bruno Mercury and has had a very profitable year. The following information was taken from the LLC's income statement for the current year Revenues $4,800,000 1,600 3,200 4,000 $4,808,800 Fees and commissions Taxable interest income from bank deposits Tax-exempt interest Net gain on stock sales Total revenues Expenses S 380,000 28,000 20,000 1,000,000 Advertising and public relations Charitable contributions Section 179 expense Employee W-2 wages Guaranteed payment (services), Ryan Ross, office manager Guaranteed payment (services), other members Business meals subject to 50% disallowance Travel Legal and accounting fees Office rentals paid Interest expense on operating line of credit Insurance premiums Office expense Payroll taxes Utilities 800,000 600,000 200,000 320,000 132,000 80,000 10,000 52,000 200,000 92,000 54,800 $3,968,800 Total expenses APPENDIX E Practice Set Assignments-Comprehensive Tax Retun Problems During the past couple of years, ROCK has taken advantage of bonus depreciation and 179 deductions and fully remodeled the premises and upgraded its lease. hold improvements. This year, ROCK wrapped up its remodel with the purchase of $20,000 of office furniture for which it will claim a $ 179 deduction. (For simplicity assume that ROCK uses the same cost recovery methods for both tax and financial purposes) There is no depreciation adjustment for alternative minimum tax pur- poses. While the property, is fully depreciated, it is not beyond the end of its depre- ciable life for purposes of the qualified business income deduction ROCK invests much of its excess cash in non-dividend-paying growth stocks and tax-exempt securities. During the year, the LLC sold two securities. On June 15, ROCK purchased 1,000 shares of Tech, Inc. stock for $100,000; it sold those shares on December 15, for $80,000. On March 15 of last year, ROCK purchased 2,000 shares of Biolabs, Inc. stock for $136,000, it sold those shares for $160,000 on December 15 of the current year. These transactions were reported to the IRS on Forms 1099-B, ROCK's basis in these shares was reported Net income per books is $840,000. On January 1, the members capital accounts equaled $200,000 each. No additional capital contributions were made this year In addition to their guaranteed payments, each member withdrew $250,000 cash during the year. The LLC's balance sheet as of December 31 of this year is as follows Ending Beginning s 444.000 120,000 436,000 960.000 (960,000) $1,000,000 $ 200,000 200000 200,000 200,000 200,000 Cash Tax-exempt securities Marketable securities Leasehold improvements, furniture, and equipment Accumulated depreciation 120,000 300,000 980,000 (980,000) Total assets s 160.000 Operating line of credit Capital, Ross Capital, Omega Capital, Carey Capital Kardigan fotal liabilities and capital