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Healthwise Medical Supplies Company is located at 2400 Second Street, City, ST 12345. The company is a general partnership that uses the calendar year and

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Healthwise Medical Supplies Company is located at 2400 Second Street, City, ST 12345. The company is a general partnership that uses the calendar year and accrual basis for both book and tax purposes. It engages in the development and sale of specialized surgical tools to hospitals. The employer identification number (EIN) is XX-2018016. The com 8 any formed and began business on January 1, 2015. It has no foreign partners or other oreign dealings. The company is neither a tax shelter nor a publicly traded partnership. The company has made no distributions other than cash, and no changes in ownership have occurred during the current year. Dr. Bailey is the Tax Matters Partner. The partner- ship makes no special elections. Table C:3 contains book balance sheet information at the beginning and end of the current year, and Table C:4 presents a book income statement for the current year. Other information follows: Information on Partnership Formation: Two individuals formed the partnership on January 1, 2015: Dr. Leisa H. Bailey (1200 First Pike, City, ST 12345) and Dr. Thomas J. Firth (3600 Third Blvd., City, ST 54321). For a 30% interest, Dr. Bailey contributed $600,000 cash. She is an active general partner who manages the company. For a 70% interest, Dr Firth contributed $1.16 million cash and 1,000 shares of Fastgrowth, Inc. stock having, at the time of contribution, a $240,000 fair market value (FMV) and a $48,000 adjusted basis. Dr. Firth is an active general part- ner who designs and develops new products. For book purposes, the company recorded the contribution of stock at fair market value. Inventory and Cost of Goods Sold (Form 1125-A): The company uses the periodic inventory method and prices its inventory using the lower of FIFO cost or market. Only beginning inventory, ending inventory, and purchases should s sold. Note: the company is exempt from the uniform capitalization (UNICAP) rules because average gross income for the previous year was less than $10 million [Sec. 263A(b)(2)(B)] Check (ii) Not applicable No Line 9 (a) (b)-(d) (e) & (f) Capital Gains and Losses (Schedule D): The company sold all 1,000 shares of the Fastgrowth, Inc. common stock on July 2, 2016, for $720,000. Dr. Firth acquired the stock on January 2, 2013, for $48,000 and contrib- uted the stock to the company on January 1, 2015, when its FMV was $240,000. Healthwise Medical Supplies Company is located at 2400 Second Street, City, ST 12345. The company is a general partnership that uses the calendar year and accrual basis for both book and tax purposes. It engages in the development and sale of specialized surgical tools to hospitals. The employer identification number (EIN) is XX-2018016. The com 8 any formed and began business on January 1, 2015. It has no foreign partners or other oreign dealings. The company is neither a tax shelter nor a publicly traded partnership. The company has made no distributions other than cash, and no changes in ownership have occurred during the current year. Dr. Bailey is the Tax Matters Partner. The partner- ship makes no special elections. Table C:3 contains book balance sheet information at the beginning and end of the current year, and Table C:4 presents a book income statement for the current year. Other information follows: Information on Partnership Formation: Two individuals formed the partnership on January 1, 2015: Dr. Leisa H. Bailey (1200 First Pike, City, ST 12345) and Dr. Thomas J. Firth (3600 Third Blvd., City, ST 54321). For a 30% interest, Dr. Bailey contributed $600,000 cash. She is an active general partner who manages the company. For a 70% interest, Dr Firth contributed $1.16 million cash and 1,000 shares of Fastgrowth, Inc. stock having, at the time of contribution, a $240,000 fair market value (FMV) and a $48,000 adjusted basis. Dr. Firth is an active general part- ner who designs and develops new products. For book purposes, the company recorded the contribution of stock at fair market value. Inventory and Cost of Goods Sold (Form 1125-A): The company uses the periodic inventory method and prices its inventory using the lower of FIFO cost or market. Only beginning inventory, ending inventory, and purchases should s sold. Note: the company is exempt from the uniform capitalization (UNICAP) rules because average gross income for the previous year was less than $10 million [Sec. 263A(b)(2)(B)] Check (ii) Not applicable No Line 9 (a) (b)-(d) (e) & (f) Capital Gains and Losses (Schedule D): The company sold all 1,000 shares of the Fastgrowth, Inc. common stock on July 2, 2016, for $720,000. Dr. Firth acquired the stock on January 2, 2013, for $48,000 and contrib- uted the stock to the company on January 1, 2015, when its FMV was $240,000

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