Help with this Partnership Income Tax Return to fill out form 1065

HUNT & STEELE, CPA'S The partnership income statement is as follows:

Income Statement:

Revenue from fees .....................................$ 310,000

Rent revenue (Farmland - Icicle County, MN)...................................12,000

Interest Revenue............................................ 3,500

Total Revenue ...................................................... $ 325,500

Operating expenses: Partners' salaries:

Hunt .................................................18,000

Steele .................................................12,000

Other salaries ..........................................120,000

Office rent ...................................................4,800

TR-2 Insurance ...................................................8,100

Payroll taxes..............................................10,180

Bad debts (direct write-off)............................740

Employee benefits.......................................7,244

Depreciation (MACRS) ............................14,280

Charitable contributions..............................3,600

Utilities ...................................................1,635

Maintenance and repairs.............................2,466

Office supplies............................................6,290

Dues and subscriptions .............................11,689

Travel expense (includes meals and lodging of $3,815).................................7,995

Continuing education, seminars..................5,310

Professional library .....................................8,225

Employees' profit-sharing plan .................12,000

Interest expense....................................... 2,363

Total business expenses....................256,917

Rental expenses:

Property taxes........................................1,400

Insurance ..................................................250

Legal fees............................................. 450

Total rental expenses.................................. 2,100

Total expenses............................................................ 259,017

Net income ............................................................ $ 66,483

The partnership balance sheets appear as follows:

Balance Sheet: 12-31-12 12-31-11

Assets: Cash .............................................$ 3,610 $ 4,800

Accounts receivable ..................................18,044 18,950

Office supplies............................................1,894 2,600

Prepaid insurance ........................................1,575 1,411

Corporate bonds........................................35,000 35,000

Land ...............................................120,000 120,000

Equipment, furniture, & fixtures...............69,500 65,000

TR-3 Less accumulated depreciation ............... (51,980) (37,700)

Total assets ............................................$ 197,643 $ 210,061

Liabilities and Capital:

Accounts payable ........................................3,744 2,850

Salaries payable ..........................................3,115 2,910

Short-term bank note.................................15,000 30,000

Partners' capital accounts........................175,784 174,301

Total liabilities and capital.........................$ 197,643 $ 210,061

Details as to the partners' capital accounts are as follows:

Statement of Owners' Equity:

Hunt. Steele Total

Beginning capital balance .......$ 83,812 $ 90,489 $ 174,301

Add net income ........................ 51,242 45,241 96,483

Subtotal .......................... 135,054 135,730 270,784

Less partners' withdrawals (includes partners' salaries).... 50,000 45,000 95,000

Ending capital balance ............ $85,054 $ 90,730 $ 175,784

The partnership figures its income and deductions on the accrual basis of accounting. In addition to the net income, the partnership earned a jobs-related tax credit of $6,400 during 2012. The credit is to be apportioned accordingly. Equipment (7-year property) was acquired during the first half of 2012 at a cost of $4,500. Use 14% as the MACRS rate for the year of acquisition. Other MACRS depreciation from assets placed in service prior to 2012 equals $13,650. The final deduction for depreciation should be the $14,280 that is also shown on the partnership income statement.