C:9-57 TAX FORM/RETURN PREPARATION PROBLEMS The Dapper-Dons Partnership was formed ten years ago as a general partnership to cus- tom tailor men's clothing. Dapper-Dons is located at 123 Flamingo Drive in City, ST, 54321. Bob Dapper manages the business and has a 40% capital and profits interest. His address is 709 Brumby Way, City, ST, 54321. Jeremy Dons owns the remaining 60% interest but is not active in the business. His address is 807 Ninth Avenue, City, ST, 54321. The partnership values its inventory using the cost method and did not change the method used during the current year. The partnership uses the accrual method of accounting. The partnership has no foreign partners, no foreign transactions, no inter- ests in foreign trusts, and no foreign financial accounts. This partnership is neither a tax shelter nor a publicly traded partnership. No changes in ownership of partnership interests occurred during the current year. The partnership made cash distributions of $155,050 and $232,576 to Dapper and Dons, respectively, on December 30 of the cur- rent year. It made no other property distributions. Financial statements for the current year are presented in Tables C:9-1 and C:9-2. Bob Dapper is the Designated Partnership Representative. Prepare a 2020 partnership tax return for Dapper-Dons Partnership. TABLE C:9-1 Dapper-Dons Partnership Income Statement for the 12 Months Ending December 31, 2020 (Problem C:9-57) Sales Returns and allowances $2,357,000 (20,000) $2,337,000 $ 200,050 624,000 600,000 54,000 $1,478,050 (146,000) (1,332,050) $1,004,950 Beginning inventory (FIFO method) Purchases Labor (W-2 wages) Other costs Goods available for sale Ending inventory Gross profit Salaries for employees other than partners (W-2 wages) Guaranteed payment to Dapper for services Utilities expense Depreciation Automobile expense Office supplies expense Advertising expense Bad debt expense Interest expense (all business-related) Rent expense Travel expense (meals cost $4,050 of this amount) Repairs and maintenance expense Accounting and legal expense Charitable contributions Payroll taxes Other taxes (all trade-or business-related) Total expenses Operating profit Other income and losses: Gain on sale of AB stock Loss on sale of CD stock Sec. 1231 gain on sale of lande Interest on tax-exempt municipal bonds Dividends from 15%-owned domestic corporation Net income $51,000 85,000 46,428 49,782 12,085 4,420 85,000 2,100 45,000 7,400 11,020 68,300 3,600 16,400 5,180 1,400 494,115 $ 510,835 $ 18,000 (26,075) 5,050 2,000 11,000 9,975 $ 520,810 Tax basis and book basis numbers are the same amount. The partnership made all contributions in cash to qualifying charities. The partnership purchased the AB stock as an investment two years ago on December 3 for $40,000 and sold it on June 16 of the current year for 558,000 The partnership purchased the CD stock as an investment on February 13 of the current year for $100,000 and sold it on August 3 for $73,925. The partnership used the land as a parking lot for the business. The partnership purchased the land four years ago on March 17 for $30,000 and sold it on August 13 of the current year for $35,050 TABLE C:9-2 Dapper-Dons Partnership Balance Sheet for January 1 and December 31, 2020 (Problem C:9-57) Balance January 1 Balance December 31 Assets: Cash Accounts receivable Inventories Marketable securities Building and equipment Minus: Accumulated depreciation Land Total assets $ 10,000 72,600 200,050 220,000 337,434 (123,318) 185,000 $901,766 $ 40,000 150,100 146,000 260,000 465,000 (173,100) 240,000 $1,128,000 $ Liabilities and equities: Accounts payable Accrued salaries payable Payroll taxes payable Sales taxes payable Mortgage and notes payable (current maturities) Long-term debt Capital: Dapper Dons Total liabilities and equities $ 35,000 14,000 3,416 5,200 44,000 210,000 46,000 18,000 7,106 6,560 52,000 275,000 236,060 354,090 289,334 434,000 $1,128,000 $901,766 Tax basis and book basis numbers are the same amount. Includes stocks, some of which were sold in the current year, and tax-exempt municipal bonds acquired in the current year