Ch 9 tax return

David, George, and Bob are equal partners in BigBox, LLC, a small business consulting services firm. The partners are not related and all are U.S. citizens. The limited liability company uses the accrual basis and the calendar year and began operations on March 1, 2011. The following information was taken from the LLC's income statement (its audited financial statements prepared under GAAP) for the current year.

Revenues:

Revenues $852,000

Tax-exempt interest income 5,000

Dividend income (all qualified) 3,900

Expenses:

Business interest expense (63,100)

Employee salaries (325,000[BA1] )

Advertising (17,000)

Office Expense (18,600)

Payroll taxes (35,400)

Depreciation Expense (12,000)

Guaranteed payment, David (120,000)

Entertainment for clients (6,600)

Travel (10,000)

Contribution to charity (4,200)

Equipment rental (11,000)

Life insurance premiums on officers (2,500)

Utilities (15,000)

Loss on sale of investments (6,000)

On October 1, 2021 the partnership sold stock for $48,000; it had purchased the securities for $54,000 on June 3, 2011 as an investment. This is reflected in the loss on the income statement. There were no other purchases or sales of securities this year.

The travel is for airplane tickets and hotels for business meetings. $1,200 of meals are included in that total.

In 2021, the company claimed $12,000 of depreciation expense for financial accounting purposes. The company purchased and placed in service $30,000 in equipment this year and claimed 100% bonus depreciation on the equipment for tax purposes. All other assets from prior years had been fully depreciated for tax purposes because they were subject to bonus depreciation in those years. No fixed assets were disposed of this year.

On January 1, 2021, the partners' capital accounts equaled $93,000 each. No additional capital contributions were made in 2021, and each partner made cash withdrawals of $85,000 during the year. David is the active manager of the business. The other partners are passive investors that do not participate in the LLC activity at all.

The partnerships balance sheet prepared on the book (GAAP) basis as of December 31, 2021 is as follows:

Beginning Ending

Cash $ 46,000 $ 62,500

Tax-exempt securities 70,000 70,000

Marketable securities 130,000 76,000

Machinery 170,000 200,000

Accumulated depreciation (36,000) (48,000)

Total assets $380,000 360,500

Accounts payable $25,000 $32,000

Notes Payable 76,000 90,000

Capital, David 93,000 79,500

Capital, George 93,000 79,500

Capital, Bob 93,000 79,500

Total liabilities and capital $380,000 360,500

Use the cash account as a plug figure to make the equation balance.

The note payable is a nonrecourse loan on property the partnership purchased. All the partners are responsible for the accounts payable. The partnership has no foreign bank accounts or foreign operations. It is not publicly traded. David is the designated partnership representative. It has not made a Section 754 election and did not distribute property other than cash this year.

Required:

Prepare 2021 Form 1065 and Form K-1s for David and Depp only. Please do both!