Macarius Calero and Gakuto Akatusuka formed the M&G Pet Hospital, LLC under the laws of the state of Arkansas on September 1, 2000. The LLC operates a clinic and bording facilty for small animals. The members share all aspects of the practice equally. The business code is 541940 and the employer identification number is 24-3333333. Macarius is the Tax Matters Partner The LLC uses the accrual method of accounting and the calendar year. The business office is located at 6543 East Pecan Street, Jonesboro, Arkansas 72401. Macarius and Gakuto live nearby at 1521 South Mosquito Trail and 3315 North Mallard Drive, respectively. Their social security numbers are 403-11- 1111 for Macarius and 518-22-2222 for Gakuto. Macarius and Gakuto are both individuals, both are active in the business, and both are U.S. citizens. 1. All liabilities were created by the LLC, and should be treated as recourse because the members have guaranteed the debt. 2. You will have Share e the partners' drawing accounts and current year income account into the partners' capital accounts. Remember, ending capital accounts should be equal. 3. Guaranteed payments were made equally to each member. 4. Contributions were to the Arkansas State University Department of Accounting. A-State is a section 501(c)(3) organization. Prepare a 2020 Form 1065, Schedule K, Schedule Land M (even if not required by the IRS instructions to Form 1065), and Schedule K-1s for Macarius and Gakuto. Complete all pages, including responses to all questions. If any necessary information is missing in the problem, assume a logical answer and record it. Ordinary income from the LLC is considered self-employment income. Macarius is the tax matters partner. this year, The partnership does not need to file Form 8893, is not publicly traded, did not have any debt cancelled or forgiven, is not engaged in any type of tax shelter activity, does not have a foreign bank account, is not involved with a foreign trust, does not have a section 754 election in place and is not making one is not making a basis adjustment under section 743 or 734, has not engaged in a like-kind exchange, did not distribute any undivided interest in partnership property, does not have to file Form 8858, is not required to file Form 8865, does not have to file any Forms 1099, is attaching zero Forms 5471 to the return, has no credits, has no foreign transactions, is not eligible for the Domestic Production Activities Deduction, and has no special allocations other than guaranteed payments. Override depreciation on page 1, and do not attach Form 4562. Inventory and Cost of Goods Sold (Form 1125-A): The partnership prices its inventory using the lower of FIFO cost or market. Only beginning inventory, ending inventory, and purchases should be reflected in Form 1125-A. No other costs or expenses are allocated to cost of goods sold. Note: the partnership is exempt from the uniform capitalization (UNICAP) rules because average gross income for the previous three years was less than $10 million. There were no writedowns of subnormal goods. Financial statements for the partnership are given below. Balance Sheet Cash Marketable Securities Municipal Bonds Accounts receivable Allowance for doubtful accounts Inventories Prepaid expenses Building Equipment Land Accumulated depreciation Other assets Total assets 1/1/2020 12/31/2020 89,100 577,200 72,300 87,700 14,000 14,000 173, 100 183,100 -7,200 -7,600 76,000 93,800 11,700 36,800 996,300 1,080,300 277,200 277,200 196,000 196,000 -548,000 -579,200 22,500 20,600 1,373,000 1,979,900 Liabilities and equity Accounts payable Accrued expenses Current Portion of Long-term Debt Notes payable Partners' Capital Macarius Partners' Capital Gakute Drawing Macarius Drawing Gakute Current Year Income Total liabilities and equity 178,100 179,000 55,600 57,500 101,200 85,500 299,500 305,800 369,300 369,300 369,300 369,300 -920,200 -920,200 2,453,900 1,373,000 1,979,900 Statement of Partners' Capital Beginning Balance Plus Book Income Less Distributions to Partners Ending Balance 738,600 2,453,900 -1,840,400 1,352,100 Income Statement Veteraniarx and boarding services Sales of medicine and food Interest income on municipal bonds Other interest income Dividends Received 4,480,000 1,183,800 2,500 6,700 600 5,673,600 Total Income Cost of sales Guaranteed Payments Salaries-staff Advertising Bad debt expense Charitable contributions Depreciation Insurance Interest expense Legal and accounting expenses Meals and entertainment Payroll and other taxes Pension plan expenses Postage and shipping Repairs and maintenance Supplies Telephone Utilities 382,400 2,240,000 353,300 19,900 2,000 12,300 31,200 4,500 32,100 56,000 8,900 30,000 21,200 1,700 8,900 7,700 2,200 5,400 Total Deductions 3,219,700 2,453,900 Book Income Macarius Calero and Gakuto Akatusuka formed the M&G Pet Hospital, LLC under the laws of the state of Arkansas on September 1, 2000. The LLC operates a clinic and bording facilty for small animals. The members share all aspects of the practice equally. The business code is 541940 and the employer identification number is 24-3333333. Macarius is the Tax Matters Partner The LLC uses the accrual method of accounting and the calendar year. The business office is located at 6543 East Pecan Street, Jonesboro, Arkansas 72401. Macarius and Gakuto live nearby at 1521 South Mosquito Trail and 3315 North Mallard Drive, respectively. Their social security numbers are 403-11- 1111 for Macarius and 518-22-2222 for Gakuto. Macarius and Gakuto are both individuals, both are active in the business, and both are U.S. citizens. 1. All liabilities were created by the LLC, and should be treated as recourse because the members have guaranteed the debt. 2. You will have Share e the partners' drawing accounts and current year income account into the partners' capital accounts. Remember, ending capital accounts should be equal. 3. Guaranteed payments were made equally to each member. 4. Contributions were to the Arkansas State University Department of Accounting. A-State is a section 501(c)(3) organization. Prepare a 2020 Form 1065, Schedule K, Schedule Land M (even if not required by the IRS instructions to Form 1065), and Schedule K-1s for Macarius and Gakuto. Complete all pages, including responses to all questions. If any necessary information is missing in the problem, assume a logical answer and record it. Ordinary income from the LLC is considered self-employment income. Macarius is the tax matters partner. this year, The partnership does not need to file Form 8893, is not publicly traded, did not have any debt cancelled or forgiven, is not engaged in any type of tax shelter activity, does not have a foreign bank account, is not involved with a foreign trust, does not have a section 754 election in place and is not making one is not making a basis adjustment under section 743 or 734, has not engaged in a like-kind exchange, did not distribute any undivided interest in partnership property, does not have to file Form 8858, is not required to file Form 8865, does not have to file any Forms 1099, is attaching zero Forms 5471 to the return, has no credits, has no foreign transactions, is not eligible for the Domestic Production Activities Deduction, and has no special allocations other than guaranteed payments. Override depreciation on page 1, and do not attach Form 4562. Inventory and Cost of Goods Sold (Form 1125-A): The partnership prices its inventory using the lower of FIFO cost or market. Only beginning inventory, ending inventory, and purchases should be reflected in Form 1125-A. No other costs or expenses are allocated to cost of goods sold. Note: the partnership is exempt from the uniform capitalization (UNICAP) rules because average gross income for the previous three years was less than $10 million. There were no writedowns of subnormal goods. Financial statements for the partnership are given below. Balance Sheet Cash Marketable Securities Municipal Bonds Accounts receivable Allowance for doubtful accounts Inventories Prepaid expenses Building Equipment Land Accumulated depreciation Other assets Total assets 1/1/2020 12/31/2020 89,100 577,200 72,300 87,700 14,000 14,000 173, 100 183,100 -7,200 -7,600 76,000 93,800 11,700 36,800 996,300 1,080,300 277,200 277,200 196,000 196,000 -548,000 -579,200 22,500 20,600 1,373,000 1,979,900 Liabilities and equity Accounts payable Accrued expenses Current Portion of Long-term Debt Notes payable Partners' Capital Macarius Partners' Capital Gakute Drawing Macarius Drawing Gakute Current Year Income Total liabilities and equity 178,100 179,000 55,600 57,500 101,200 85,500 299,500 305,800 369,300 369,300 369,300 369,300 -920,200 -920,200 2,453,900 1,373,000 1,979,900 Statement of Partners' Capital Beginning Balance Plus Book Income Less Distributions to Partners Ending Balance 738,600 2,453,900 -1,840,400 1,352,100 Income Statement Veteraniarx and boarding services Sales of medicine and food Interest income on municipal bonds Other interest income Dividends Received 4,480,000 1,183,800 2,500 6,700 600 5,673,600 Total Income Cost of sales Guaranteed Payments Salaries-staff Advertising Bad debt expense Charitable contributions Depreciation Insurance Interest expense Legal and accounting expenses Meals and entertainment Payroll and other taxes Pension plan expenses Postage and shipping Repairs and maintenance Supplies Telephone Utilities 382,400 2,240,000 353,300 19,900 2,000 12,300 31,200 4,500 32,100 56,000 8,900 30,000 21,200 1,700 8,900 7,700 2,200 5,400 Total Deductions 3,219,700 2,453,900 Book Income