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APPENDIX E Practice Set Assignments- Premium's accounting firm provides the following additional information. Distributions to shareholders $100,000 Beginning balance, Accumulated adjustments account $111,148 Using the preceding information, prepare a complete Form 1120S and Schedule K-1s for John Parsons and George Smith, 5607 20th Street, Cut and Shoot, TX 77303. Do not complete the Form 4562. If any information is missing, make realistic assumptions. PROBLEM 7-GIFT TAX (FORM 709) James A. and Ella R. Polk, ages 70 and 65, are retired physicians who live at 13319 Taylorcrest Street, Houston, Texas 77079. Their three adult children (Benjamin Polk, Michael Polk, and Olivia Turner) are mature and responsible persons. The Polks have heard that some in Congress have proposed lowering the Federal gift tax exclusion to $3 million. Although this change likely will not occur, the Polks feel they should take advantage of the more generous exclusion available under existing law. Thus, the Polks make transfers of many of their high value investments. These and other gifts made dur- ing 2016 are summarized below. Donor Asset Transfer James Ella Condominium located in Conroe (TX) acquired in 1999, cost $1.2 million, to Benjamin, Michael, and Olivia as equal tenants in common. $1,900,000 $1,900,000 Office building, located in Round Rock (TX) built in 2001, cost $1.8 million, to Benjamin, Michael, and Olivia as equal tenants in common. 2,300,000 2,300,000 Vacation ranch in Bandera (TX) inherited by James from his father in 1996, value then $900,000, to Benjamin, Michael, and Olivia as equal joint tenants with right of survivorship. 2,600,000 -0- Ella used her separate property to reimburse her father (Alan Roberts) for his heart bypass operation. -0- 82,000 Paid for daughter's (Olivia's) wedding to John Turner 20,000 20,000 James used his separate property to purchase a new automobile (BMW) as a graduation present (from medical school) for his favorite niece (Carol Polk) 42,000 -0- Prepare 2016 gift tax returns (Form 709) for both of the Polks to compute the total tax- able gifts (line 3) for James and Ella; stop with line 3 of page 1, but complete pages 2 and 3 of the return. An election to split gifts is made. The Polks have made no taxable gifts in prior years. Relevant Social Security numbers are 123-45-6789 (James) and 123-45-6788 (Ella). PROBLEM 8-TRUST (FORM 1041) turn (Form 1041) for the Blue Trust. In addition