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I need help with this tax return and including all schedules PRIMA DONNA PARTNERSHIP The Prima Donna Partnership was formed ten years ago as a
I need help with this tax return and including all schedules
PRIMA DONNA PARTNERSHIP The Prima Donna Partnership was formed ten years ago as a general partnership to custom tailor women's clothing. Prima Donna is located at 123 Flamingo Drive in Haines City, MO 54321. Mariana Prima manages the business and has a 40% capital and profits interest. Her address is 709 Brumby Way, Haines City, MO 54321. Donna Hart owns the remaining 60% interest but is not active in the business. Her address is 807 Ninth Avenue Haines City, MO 54321. The partnership values its business using the cost method and did not change the method used during the current year. The partnership uses the accrual method of accounting. Because of its simplicity the partnership is not subject to partnership audit procedures. The partnership has no foreign partners, no foreign transactions, no interest in foreign trusts, and no foreign bank accounts. This partnership is neither a tax shelter nor a publicly traded partnership. No changes in ownership of partnership interest occurred during the current year. The partnership made cash distributions of $155,050 and $232,576 to Prima and Hart, respectively, on December 30, 2014. It made no other cash or property distributions during the year. Assume that the business qualifies as a US production activity and that its qualified production activity income is $600,000. As an eligible small pass-though partnership, uses the small business simplified overall method for reporting these activities. See the financial statements for the period that follow. Required: Prepare a 2014 partnership return including all required schedules. Prima-Donna Partnership Income Statement for the 12 months ended December 31, 2014 Sales Returns and allowances Beginning Inventory (FIFO method) Purchases Labor Supplies Other costsa Goods Available for Sale Ending Inventoryb Gross Profit Salaries for employees Guaranteed payment for Prima Utilities Expense Depreciation (MACRS is $74,311)c Automobile Expense Office Supplies Expense Advertising expense Bad Debt Expense Interest Expensed Rent Expense Travel Expensee Repairs and Maintenance Accounting and Legal Expense Charitable Contributionsf Payroll Taxes Other Taxes Total Expense Operating Profits Other Income and losses: Gain on sale of AB stockg Loss on sale of CD stockh Sec. 1231 gain on sale of landi Interest on US Treasury billsj Dividends from 15% owned domestic corporation Net Income $200,050 624,000 600,000 42,000 12,000 $1,478,050 (146,000) 51,000 85,000 46,428 49,782 12,085 4,420 85,000 2,100 45,000 7,400 11,020 68,300 3,600 16,400 5,180 1,400 18,000 (26,075) 5,050 2,000 11,000 $2,357,000 (20,000) $2,337,000 (1,332,050) $1,004,950 494,115 $510,835 9,975 $520,810 a Additional Sec 263A costs of $7,000 for the current year are included in other costs. b Ending inventory includes the appropriate Sec. 263A costs and no further adjustment is needed for tax purposes. c The partnership reports a $10,000 positive AMT adjustment for property placed in service after 1986. They acquired and placed in service $40,000 of rehabilitation expenditures for certified historical property this year. The appropriate MACRS depreciation on this is included in the MACRS amount of $74,311. d All trade or business related e Meals of $4,100 are included in the travel expense. f The partnership made all contributions in cash to qualifying charities. g The partnership purchased the AB stock as an investment two years ago on December 1 for $40,000 and sold it on June 14 of the current year. h The partnership purchased the CD stock as an investment on February 15 of the current year for $100,000 and sold it on August 1 for $73,925. i The partnership used the land as a parking lot for the business. The partnership purchased the land four years ago on March 17 for $30,000 and sold it on August of this year for $35,050. j Based on $80,000 face amount Balance Sheet for January 1 and December 31 of the Current Year Assets: Cash Accounts Receivable Inventories Marketable Securitiesa Building & Equipment Accumulated Depreciation Land Total Assets Liabilities & Equities: Accounts Payable Accrued Salaries Payable Payroll Taxes Payable Sales Tax Payable Current Mortgage and Note Payable Long-term Debt Capital: Prima Hart Total Liabilities and Equities a Short Term Investment Balance January 1 Balance December 31 $10,000 72,600 200,050 220,000 374,600 (160,484) 185,000 $901,766 $35,000 14,000 3,416 5,200 44,000 210,000 236,060 354,090 $901,766 $40,000 150,100 146,000 260,000 465,000 (173,100) 240,000 $1,128,000 $46,000 18,000 7,106 6,560 52,000 275,000 289,334 434,000 $1,128,000Step by Step Solution
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