FORM 1065 RETURN PROBLEM

Wilson and Walters are the members of Woody's Widgets LLC. Wilson owns 40% and Walters owns 60%. They are both active in the business, working every day. Capital, profits and losses are shared in proportion to ownership. Woody's is on the accrual basis of accounting and has a December 31 year end. Woody's makes and sells widgets. It has no farm, oil or gas operations.

Here is Woody's 2016 Financial Information:

Sales $7,500,000

Returns 750,000

Cost of Goods Sold 3,750,000

Section 179 Election 150,000

Electricity 90,000

Telephone 42,000

Postage 20,000

Health insurance 226,000

Property insurance 100,000

Rent 900,000

Meals & Entertainment 300,000

Automobile

Employees 60,000

Members 40,000

Life Insurance

Employee Group Term (max. $50,000) 17,250

Members 25,000

Contribution to Profit Sharing Plan 444,000

Charitable Contributions

Public Charities 120,000

Private Foundations 20,000

Dividends Received (publicly traded US) 200,000

LT Capital Gain 100,000

LT Capital Loss 60,000

ST Capital Gain 25,000

ST Capital Loss 75,000

Interest

US corporate bonds 149,600

Michigan bonds 20,000

US Treasuries 25,000

Each member's draw is $20,000 per month. During 2016, each member received the following distributions:

Cash $50,000

Property

Wilson GE Stock FMV = $2,500

Walters Computer, Truck, CNC machine Total FMV= $18,800

As of January 1, Wilson's capital account is 60,000 and Walter's capital account is $100,000. No capital was contributed in 2016. Both are member-managers. They file their returns in with the Ogden, UT service center.

The LLC has no foreign accounts. All of the employees are US citizens, as are Wilson and Walters.

Please prepare the following:

1065 Page 1

Page 4 Schedule K

Schedule D (Form 1065)

Schedule K-1 for both Wilson and Walters (Extra Credit)

If you need extension sheets or attachments, be sure to include them.

If information was not given, leave blank (for example addresses, balance sheet information, principal product and business activity).