Forms to Complete (2015)

• Form 1065 (not Schedule B)
• Schedule D and Forms 8949
• Form 1125-A
• Schedule K-1 (Ms. Maine)

ACCT 346 Tax Return Information- Part 2 (Partnership) Summer 2016 Tax Return Case Study Part 2 -- Form 1065 During the year ended 12/31/2015, Research Associates: Paid partner draws of $198,000 to Ms. Maine and $22,000 to Dr. Rue. Made guaranteed payments of $50,000 to Ms. Maine and $25,000 to Dr. Rue. Received exempt municipal interest income of $5,000. Received dividend income of $30,000 from Marvelous Cures, Inc. (in which Research has a 30% ownership interest) and $20,000 from corporations in which Research has a 20% ownership interest. All dividends are qualified dividends. Paid no salaries/wages attributable to inventories. Also note that the partners had $396,000 (Ms. Maine) and $44,000 (Dr. Rue) in their capital accounts at the beginning of the year. The partnership's balance sheets and income statement are presented in Exhibits 3 and 4, respectively. Exhibit 3 Research Associates Balance Sheet Years ended December 31, 2014 and 2015 Balances as of ASSETS Cash Inventory Depreciable assets (net) TOTAL ASSETS 12/31/2014 $25,000 $150,000 $300,000 $475,000 12/31/2015 $71,000 $100,000 $200,000 $371,000 LIABILITIES & RETAINED EARNINGS Accounts payable (inventory) Notes payable Partners' capital TOTAL LIABILITIES & PARTNERS' CAPITAL $10,000 $25,000 $440,000 $12,000 $0 $359,000 $475,000 $371,000 1 ACCT 346 Tax Return Information- Part 2 (Partnership) Summer 2016 Exhibit 4 Research Associates Income Statement Year ended December 31, 2015 Gross receipts Cost-of-Goods Sold Dividend Income Interest Income Capital losses $1,000,000 (250,000) 50,000 11,000 (35,000) Salaries and wages Guaranteed Payments Rents Property taxes Utilities Depreciation Charitable contributions Investment interest expense ($345,000) (75,000) (55,000) (10,000) (20,000) (100,000) (20,000) (12,000) $776,000 ($637,000) $139,000 Property Transactions Item Purchase** Price - Date Sale Price - Date 100 shares of CYA stock $3,000 - 1/1/2000 $7,000 - 1/15/2015 2,000 shares of ABZ stock $100,000 - 6/30/2000 $54,000 - 6/29/2015 City of LA Bonds $25,000 - 10/15/2014 $22,000 - 2/14/2015 State of MI Bonds $125,000 - 5/30/2014 $135,000 - 10/31/2015 **The taxpayer received 1099s for these transactions, but the basis was not reported to the IRS. 2 ACCT 346 Tax Return Information- Part 2 (Partnership) Section 199 Information Domestic Production Gross Receipts Summer 2016 $317,463 Allocable Cost of Goods Sold $63,493 Deductions Allocable to DPGR $142,858 W-2 Wages Related to QPAI $40,000 Required Use the information presented to prepare the assigned pages of the Form 1065 and Schedule D. Also prepare one Schedule K-1 (Form 1065) for Ms. Maine. (You will not be filing a complete return.) Use PDF forms from the IRS web site. 3