Carrie D'Lake, Reed A. Green, and Doug A. Divot share a passion for golf and decide to go into the golf club manufacturing business together. On January 2, 2020, D'Lake, Green, and Divot form the Slicenhook Partnership, a general partnership. Slicenhook's main product will be a perimeter-weighted titanium driver with a patented graphite shaft. All three partners plan to actively participate in the business. The partners contribute the following property to form Slicenhook: Partner Carrie D'Lake Contribution Land, FMV $460,000 Basis $460,000, Mortgage $ 60,000 Cash $400,000 Cash $400,000 Reed A. Green Doug A. Divot Carrie had recently acquired the land with the idea that she would contribute it to the newly formed partnership. The partners agree to share in profits and losses equally. Slicenhook elects a calendar-year-end and the accrual method of accounting. In addition, Slicenhook received a $1,500,000 recourse loan from Big Bank at the time the contributions were made. Slicenhook uses the proceeds from the loan and the cash contributions to build a state-of-the-art manufacturing facility ($1,200,000), purchase equipment ($600,000), and produce inventory ($400,000). With the remaining cash, Slicenhook invests $45,000 in the stock of a privately owned graphite research company and retains $55,000 as working cash. Slicenhook operates on a just-in-time inventory system so it sells all inventory and collects all sales immediately. That means that at the end of the year, Slicenhook does not carry any inventory or accounts receivable balances. During 2020, Slicenhook has the following operating results: $1,126,000 400,000 900 1,500 126,000 Sales Cost of goods sold Interest income from tax-exempt bonds Qualified dividend income from stock Operating expenses Depreciation (tax) $179 on equipment Equipment Building Interest expense on debt $39,000 81,000 24,000 144,000 120,000 The partnership is very successful in its first year. The success allows Slicenhook to use excess cash from operations to purchase $15,000 of tax-exempt bonds (you can see the interest income already reflected in the operating results). The partnership also makes a principal payment on its loan from Big Bank in the amount of $300,000 and a distribution of $100,000 to each of the partners on December 31, 2020. The partnership continues its success in 2021 with the following operating results: Sales Cost of goods sold $1,200,000 420,000 Sales Cost of goods sold Interest income from tax-exempt bonds Qualified dividend income from stock Operating expenses Depreciation (tax) Equipment Building Interest expense on debt $1,200,000 420,000 900 1,500 132,000 $147,000 30,000 177,000 96,000 The operating expenses include a $1,800 trucking fine that one of its drivers incurred for reckless driving and speeding and meals expense of $6,000. By the end of 2021, Reed has had a falling out with Carrie and Doug and has decided to leave the partnership. He has located a potential buyer for his partnership interest, Indie Ruff. Indie has agreed to purchase Reed's interest in Slicenhook for $730,000 in cash and the assumption of Reed's share of Slicenhook's debt. Carrie and Doug, however, are not certain that admitting Indie to the partnership is such a good idea. They want to consider having Slicenhook liquidate Reed's interest on January 1, 2022. As of January 1, 2022, Slicenhook has the following assets: Cash Investment-tax exempts Investment stock Equipment-net of dep. Building-net of dep. Land Total Tax Basis FMV $ 876,800 $ 876,800 15,000 18,000 45,000 45,000 333,000 600,000 1,146,000 1,440,000 460,000 510,000 $2,875,800 $3,489,800 Carrie and Doug propose that Slicenhook distribute the following to Reed in complete liquidation of his partnership interest: Tax Basis Cash $ 485,000 Investment stock 45,000 Equipment-$200,000 cost, net of dep. 111,000 Total $ 641,000 FMV $ 485,000 45,000 200,000 $ 730,000 Slicenhook has not purchased or sold any equipment since its original purchase just after formation. e-1. Using the information provided, prepare Slicenhook's tax form 1065 for 2020. Please right click on the attached Adobe document and select open in new window. Then, download the Tax Form and enter the required values in the appropriate fields. Save your completed Tax Form to your computer and then upload it here by clicking "Browse." Next, click "Save." Use 2020 tax rules regardless of year on form. upload a response file (15MB max) download reference file Choose File No file chosen POF f1065.pdf save OMB No. 1545-0123 1065 Form U.S. Return of Partnership Income For calendar year 2019, or tax year beginning_2019, ending Go to www.irs.gov/Form 1065 for instructions and the latest information. Name of partnership 2019 Department of the Treasury Internal Revenue Service A Principal business activity D Employer identification number E Date business started B Principal product or service Type Number, street, and room or suite no. If a P.O. box, see instructions. or C Business code number Print City or town, state or province, country, and ZIP or foreign postal code F Total assets (see instructions) Income 8 8 9 $ G Check applicable boxes: (1) Initial return (2) (2) Final return (3) Name change (4) Address change (5) Amended return HCheck accounting method: (1) Cash (2) Accrual (3) Other (specify ) Number of Schedules K-1. Attach one for each person who was a partner at any time during the tax year J Check if Schedules C and M-3 are attached K Check if partnership: (1) Aggregated activities for section 465 at-risk purposes (2) Grouped activities for section 469 passive activity purposes Caution: Include only trade or business income and expenses on lines 1a through 22 below. See instructions for more information. 1a Gross receipts or sales 1a b Returns and allowances 1b c Balance. Subtract line 1b from line 1a. 1c 2 Cost of goods sold (attach Form 1125-A) 2 3 Gross profit. Subtract line 2 from line 1c. 3 4 Ordinary income (loss) from other partnerships, estates, and trusts (attach statement) 4 5 Net farm profit (loss) (attach Schedule F (Form 1040 or 1040-SR)) 5 6 Net gain (loss) from Form 4797, Part II, line 17 (attach Form 4797) 6 7 Other income (loss) (attach statement) 7 Total income (loss). Combine lines 3 through 7 9 Salaries and wages (other than to partners) (less employment credits) 10 Guaranteed payments to partners 10 11 Repairs and maintenance. 11 12 Bad debts 12 aus 13 Rent 13 no.. 14 Taxes and licenses 14 15 Interest (see instructions) 15 16a Depreciation (if required, attach Form 4562). 16a b Less depreciation reported on Form 1125-A and elsewhere on return 16b 16c 17 Depletion (Do not deduct oil and gas depletion.) 17 18 To Retirement plans, etc... 18 19 Employee benefit programs 19 20 Other deductions (attach statement) 20 21 Total deductions. Add the amounts shown in the far right column for lines 9 through 20 . 21 Ordinary business income (loss). Subtract line 21 from line 8 22 23 20 Interest due under the look back method-completed long-term contracts (attach Form 8697). 23 24 Interest due under the look back method-income forecast method (attach Form 8866) 24 20 25 BBA AAR imputed underpayment (see instructions) 25 26 Other taxes (see instructions) 26 27 Total balance due. Add lines 23 through 26 27 21 28 Payment (see instructions). 28 20 29 Amount owed. If line 28 is smaller than line 27, enter amount owed. 29 30 Overpayment. If line 28 is larger than line 27, enter overpayment 30 Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than partner or limited liability company member) is based on all information of which preparer has any knowledge Here May the IRS discuss this return with the preparer shown below? Signature of partner or limited liability company member See instructions. Yes No Print/Type preparer's name Preparer's signature Paid Check if PTIN self-employed Preparer Firm's EIN Use Only Firm's address Phone no For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11390Z Form 1065 (2019) Deductions (see instructions for limitations) 22 Tax and Payment Sign Date Date Firm's name a a Form 1065 (2019) Page 2 Schedule B Other Information 1 What type of entity is filing this return? Check the applicable box: Yes No Domestic general partnership b Domestic limited partnership c Domestic limited liability company d Domestic limited liability partnership e Foreign partnership f Other 2 At the end of the tax year: Did any foreign or domestic corporation, partnership (including any entity treated as a partnership), trust, or tax- exempt organization, or any foreign government own, directly or indirectly, an interest of 50% or more in the profit, loss, or capital of the partnership? For rules of constructive ownership, see instructions. If "Yes," attach Schedule B-1, Information on Partners Owning 50% or More of the Partnership b Did any individual or estate own, directly or indirectly, an interest of 50% or more in the profit, loss, or capital of the partnership? For rules of constructive ownership, see instructions. If "Yes," attach Schedule B-1, Information on Partners Owning 50% or More of the Partnership 3 At the end of the tax year, did the partnership: a Own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of stock entitled to vote of any foreign or domestic corporation? For rules of constructive ownership, see instructions. If "Yes," complete () through (iv) below Name of Corporation (ii) Employer Identification (iii) Country of (iv) Percentage Number (if any) Incorporation Owned in Voting Stock b Own directly an interest of 20% or more, or own, directly or indirectly, an interest of 50% or more in the profit, loss, or capital in any foreign or domestic partnership (including an entity treated as a partnership) or in the beneficial interest of a trust? For rules of constructive ownership, see instructions. If "Yes," complete () through (V) below Name of Entity (ii) Employer (ii) Type of (iv) Country of (v) Maximum Entity Number of any Percentage Owned in Organization Profit, Loss, or Capital Identification 4 Does the partnership satisfy all four of the following conditions? Yes No a The partnership's total receipts for the tax year were less than $250,000. b The partnership's total assets at the end of the tax year were less than $1 million. c Schedules K-1 are filed with the return and furnished to the partners on or before the due date (including extensions) for the partnership return. d The partnership is not filing and is not required to file Schedule M-3 If "Yes," the partnership is not required to complete Schedules L, M-1, and M-2; item F on page 1 of Form 1065; or item Lon Schedule K-1. 5 Is this partnership a publicly traded partnership, as defined in section 469(K)(2)? 6 During the tax year, did the partnership have any debt that was canceled, was forgiven, or had the terms modified so as to reduce the principal amount of the debt? 7 Has this partnership filed, or is it required to file, Form 8918, Material Advisor Disclosure Statement, to provide information on any reportable transaction?. 8 At any time during calendar year 2019, did the partnership have an interest in or a signature or other authority over a financial account in a foreign country (such as a bank account, securities account, or other financial account)? See instructions for exceptions and filing requirements for FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). If "Yes," enter the name of the foreign country 9 At any time during the tax year, did the partnership receive a distribution from, or was it the grantor of, or transferor to, a foreign trust? If "Yes," the partnership may have to file Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. See instructions ..... 10a is the partnership making, or had it previously made and not revoked), a section 754 election? See instructions for details regarding a section 754 election. b Did the partnership make for this tax year an optional basis adjustment under section 743(b) or 734(b)? If "Yes," attach a statement showing the computation and allocation of the basis adjustment. See instructions Form 1065 (2019) Yes No 11 12 13 14 15 17 18 19 20 21 Form 1065 (2019) Page 3 Schedule B Other Information (continued) c Is the partnership required to adjust the basis of partnership assets under section 743(b) or 734(b) because of a substantial built-in loss (as defined under section 743(d)) or substantial basis reduction (as defined under section 734(d)? If "Yes," attach a statement showing the computation and allocation of the basis adjustment. See instructions Check this box if, during the current or prior tax year, the partnership distributed any property received in a like- kind exchange or contributed such property to another entity (other than disregarded entities wholly owned by the partnership throughout the tax year) ... At any time during the tax year, did the partnership distribute any partner a tenancy-in-common or other undivided interest in partnership property? If the partnership is required to file Form 8858, Information Return of U.S. Persons with Respect To Foreign Disregarded Entities (FDES) and Foreign Branches (FBS), enter the number of Forms 8858 attached. See instructions Does the partnership have any foreign partners? If "Yes," enter the number of Forms 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, filed for this partnership Enter the number of Forms 8865, Return of U.S. Persons with Respect to certain Foreign Partnerships, attached to this return 16a Did you make any payments in 2019 that would require you to file Form(s) 1099? See instructions b If "Yes." did you or will you file required Form(s) 1099? .::::: Enter the number of Forms 5471, Information Return of U.S. Persons with Respect To Certain Foreign Corporations, attached to this retur Enter the number of partners that are foreign governments under section 892 During the partnership's tax year, did the partnership make any payments that would require it to file Form 1042 and 1042-S under chapter 3 (sections 1441 through 1464) or chapter 4 (sections 1471 through 1474)? Was the partnership a specified domestic entity required to file Form 8938 for the tax year? See the Instructions for Form 8938 ::::::............... Is the partnership a section 721(c) partnership, as defined in Regulations section 1.721(c)-1(b)(14)? 22 During the tax year, did the partnership pay or accrue any interest or royalty for which the deduction is not allowed under section 267A? See instructions: If "Yes," enter the total amount of the disallowed deductions 23 Did the partnership have an election under section 163(for any real property trade or business or any farming business in effect during the tax year? See instructions. Does the partnership satisfy one or more of the following? See instructions... a The partnership owns a pass-through entity with current, or prior year carryover, excess business interest expense. b The partnership's aggregate average annual gross receipts (determined under section 448(c)) for the 3 tax years preceding the current tax year are more than $26 million and the partnership has business interest. c The partnership is a tax shelter (see instructions) and the partnership has business interest expense. "to any, complete and attach Form 8990. Is the partnership electing out of the centralized partnership audit regime under section 6221(b)? See instructions. If "Yes," the partnership must complete Schedule B-2 (Form 1065). Enter the total from Schedule B-2, Part III, line 3 If "No," complete Designation of Partnership Representative below. Designation of Partnership Representative (see instructions) Enter below the information for the partnership representative (PR) for the tax year covered by this return. Name of PR U.S. address of PR U.S. phone number of PR If the PR is an entity, name of the designated individual for the PR U.S. address of U.S. phone number of designated individual designated individual 26 Is the partnership attaching Form 8996 to certify as a Qualified Opportunity Fund? If "Yes," enter the amount from Form 8996, line 14 27 Enter the number of foreign partners subject to section 864(c)(8) as a result of transferring all or a portion of an interest in the partnership or of receiving a distribution from the partnership. ... 28 At any time during the tax year, were there any transfers between the partnership and its partners subject to the disclosure requirements of Regulations section 1.707-8? Form 1065 (2019) 24 If "Yes" 25 4 Income (Loss) 11 Employ. Deductions b Form 1065 (2019) Page 4 Schedule K Partners' Distributive Share Items Total amount Ordinary business income (loss) (page 1, line 22) 1 Net rental real estate income (loss) (attach Form 8825) 2 3a Other gross rental income (loss). . 3a b Expenses from other rental activities (attach statement) 3b Other net rental income (loss). Subtract line 3b from line 3a 3c Guaranteed payments: a Services 4a b Capital 4b c Total. Add lines 4a and 4b. 4c 5 Interest income 5 6 Dividends and dividend equivalents: a Ordinary dividends 6a b Qualified dividends 6b c Dividend equivalents 6c 7 Royalties 7 8 Net short-term capital gain (loss) (attach Schedule D (Form 1065)) 8 9a Net long-term capital gain (loss) (attach Schedule D (Form 1065)) 9a b Collectibles (28%) gain (loss). 9b Unrecaptured section 1250 gain (attach statement) 9c 10 Net section 1231 gain (loss) (attach Form 4797) 10 Other income (loss) (see instructions) Type 11 12 Section 179 deduction (attach Form 4562) 12 13a Contributions.. 13a b Investment interest expense mense 13b 100 c Section 59(e)(2) expenditures: (1) Type (2) Amount 130(2) d Other deductions (see instructions) Type 13d Tou 14a Net earnings (loss) from self-employment. 14a Gross farming or fishing income. 14b c Gross nonfarm income 14c 15a Low-income housing credit (section 420)(5)) 15a h low.income houdin EL b Low-income housing credit (other) 15b c Qualified rehabilitation expenditures (rental real estate) (attach Form 3468, if applicable) 15c d Other rental real estate credits (see instructions) Type 15d Other rental credits (see instructions) Type 15e f Other credits (see instructions) Type 15f 16a Name of country or U.S. possession b Gross income from all sources 16b c Gross income sourced at partner level 16C Foreign gross income sourced at partnership level d Reserved for future use e Foreign branch category 16e f Passive category g General category h Other (attach statement) 16h Deductions allocated and apportioned at partner level i Interest expense Other.. 16j Deductions allocated and apportioned at partnership level to foreign source income k Reserved for future use 161 I Foreign branch category no m Passive category o Other (attach statement) n General category 160 ---- p Total foreign taxes (check one): Paid I Accrued 16p q Reduction in taxes available for credit (attach statement) 169 storientov Other foreign tax information (attach statement) 17a Post-1986 depreciation adjustment 17a b Adjusted gain or loss 17b c Depletion (other than oil and gas) 17c d Oil, gas, and geothermal properties-gross income 17d e Oil, gas, and geothermal properties-deductions 17e f Other AMT items (attach statement). 174 40. 18a Tax-exempt interest income 18a b Other tax-exempt income 18b c Nondeductible expenses 18c 19a Distributions of cash and marketable securities 19a b Distributions of other property 19b 20a Investment income 20a b Investment expenses 20b Other items and amounts (attach statement) Credits Foreign Transactions > r Alternative TAM Items Other Information voor ar Depletable assets abietid Total assets Form 1065 (2019) Page 5 Analysis of Net Income (Loss) 1 Net income (loss). Combine Schedule K, lines 1 through 11. From the result, subtract the sum of Schedule K, lines 12 through 13d, and 16p 1 2 Analysis by i) Corporate (ii) Individual (iii) Individual (iv) Partnership (v) Exempt (vi) partner type: (active) (passive) Organization Nominee/Other a General partners b Limited partners ScheduleL Balance Sheets per Books Beginning of tax year End of tax year Assets (a) (b) (c) (d) 1 Cash 2a Trade notes and accounts receivable b Less allowance for bad debts 3 Inventories 4 U.S. government obligations 5 Tax-exempt securities 6 Other current assets (attach statement) 7a Loans to partners (or persons related to partners) b Mortgage and real estate loans 8 Other investments (attach statement). 9a Buildings and other depreciable assets b Less accumulated depreciation 10a b Less accumulated depletion 11 Land (net of any amortization) 12a Intangible assets (amortizable only) b Less accumulated amortization 13 Other assets (attach statement) 14 Liabilities and Capital 15 Accounts payable. 16 Mortgages, notes, bonds payable in less than 1 year 17 Other current liabilities (attach statement) 18 All nonrecourse loans. ...: 19a Loans from partners (or persons related to partners) b Mortgages, notes, bonds payable in 1 year or more . 20 Other liabilities (attach statement) 21 Partners' capital accounts 22 Total liabilities and capital Schedule M-1 Reconciliation of Income (Loss) per Books With Income (Loss) per Return Note: The partnership may be required to file Schedule M-3. See instructions. 1 Net income (loss) per books... 6 Income recorded on books this year not included 2 Income included on Schedule K, lines 1, 2, 3c, on Schedule K, lines 1 through 11 (itemize): 5, 6, 7, 8, 9a, 10, and 11, not recorded on a Tax-exempt interest $ books this year (itemize): 3 Guaranteed payments (other than health 7 Deductions included on Schedule K, lines insurance) ...... 1 through 13d, and 16p, not charged Expenses recorded on books this year against book income this year (itemize): not included on Schedule K, lines 1 a Depreciation $ through 13d, and 16p (itemize): a Depreciation $ 8 Add lines 6 and 7, b Travel and entertainment $ 9 Income (loss) (Analysis of Net Income 5 Add lines 1 through 4 . (Loss), line 1). Subtract line 8 from line 5 Schedule M-2 Analysis of Partners' Capital Accounts 1 Balance at beginning of year 6 Distributions: a Cash Capital contributed: a Cash b Property b Property 7 Other decreases (itemize): 3 Net income (loss) per books. 4 Other increases (itemize): 8 Add lines 6 and 7. 5 Add lines 1 through 4 . Balance at end of year. Subtract line 8 from line 5 5 Form 1065 (2019) 4 9 e-2. Using the information provided, prepare a Schedule K-1 for Carrie. Please right click on the attached Adobe document and select open in new window. Then, download the Tax Form and enter the required values in the appropriate fields. Save your completed Tax Form to your computer and then upload it here by clicking "Browse." Next, click "Save." Use 2020 tax rules regardless of year on form. upload a response file (15MB max) download reference file Choose File No file chosen PDF f1065sk1.pdf save 2019 651119 Final K-1 Amended K-1 1 OMB No. 1545-0123 Part III Partner's Share of Current Year Income, Deductions, Credits, and Other Items 1 Ordinary business income (oss) 15 Credits beginning 2 Schedule K-1 (Form 1065) Department of the Treasury Internal Revenue Service For calendar year 2019, or tax year , 2019 ending 1 Partner's Share of Income, Deductions, Credits, etc. See back of form and separate instructions. Partl Information About the Partnership A Partnership's employer identification number Net rental real estate income (loss) 3 Other net rental income (loss) ) 16 Foreign transactions 4a Guaranteed payments for services 4b Guaranteed payments for capital B Partnership's name, address, city, state, and ZIP code 4c Total guaranteed payments 5 Interest income 6a Ordinary dividends IRS Center where partnership filed return D Check if this is a publicly traded partnership (PTP) Part 11 Information About the Partner E Partner's SSN or TIN (Do not use TIN of a disregarded entity. See inst.) 6b Qualified dividends F Name, address, city, state, and ZIP code for partner entered in E. See instructions. 6c Dividend equivalents 17 Alternative minimum tax (AMT) items 7 Royalties 8 Net short-term capital gain (loss) 9a Net long-term capital gain (loss) 18 Tax-exempt income and nondeductible expenses 9b Collectibles (28%) gain (loss) General partner or LLC Limited partner or other LLC member-manager member H1 Domestic partner Foreign partner H2 If the partner is a disregarded entity (DE), enter the partner's: TIN Name 11 What type of entity is this partner? 12 If this partner is a retirement plan (IRA/SEP/Keogh/etc.), check here J Partner's share of profit, loss, and capital (see instructions): Beginning Ending Profit % Loss % Capital %6 Check if decrease is due to sale or exchange of partnership interest 9c Unrecaptured section 1250 gain 10 Net section 1231 gain (loss) 19 Distributions 11 Other income (loss) 20 Other information K 12 Section 179 deduction 13 Other deductions Partner's share of liabilities: Beginning Ending Nonrecourse, $ $ Qualified nonrecourse financing, $ $ Recourse $ $ Check this box if Item K includes liability amounts from lower tier partnerships. Partner's Capital Account Analysis L 14 Self-employment earnings (loss) Beginning capital account $ Capital contributed during the year $ s Current year net income (loss) $ $ Other increase (decrease) (attach explanations Withdrawals & distributions $ Ending capital account $ 21 More than one activity for at-risk purposes 22 D More than one activity for passive activity purposes *See attached statement for additional information M Did the partner contribute property with a built-in gain or loss? Yes No If "Yes," attach statement. See instructions. N Partner's Share of Net Unrecognized Section 704(c) Gain or (Loss) Beginning Ending For Paperwork Reduction Act Notice, see Instructions for Form 1065. www.irs.gov/Form 1065 For IRS Use Only Cat. No. 11394R Schedule K-1 (Form 1065) 2019