Not every part of the form need to be filled out. So please read the direction carefully. thank you.

Forms to Complete (2015)

• Form 1065 (not Schedule B)
• Schedule Dand Forms 8949
• Form 1125-A
• Schedule K-1 (Ms. Maine)

Check Figures:

Form 1065, line 14a = $230,000 Form 1065, Analysis of Net Income, line 2(a)(ii) = $219,000

Form 1065 TAX TRIAL BALANCE- Form 1065 Research Associates Gross receipts Cost of goods sold Dividend income Interest income Long-term capital loss Tax Return Book for Tax Adjustments Ordinary Inc. Return (Sch. K) (Page 1) $1,000,000 ($250,000) $50,000 $11,000 ($35,000) 776,000 0 0 Book for Sch. M-1 Financials. Adjustments $1,000,000 (250,000) 50,000 11,000 (35,000) 776,000 0 Guaranteed Payments Salaries & wages Rents Property taxes Utilities Depreciation Charitable contributions Investment interest expense (75,000) (345,000) (55,000) (10,000) (20,000) (100,000) (20,000) (12,000) (637,000) $139,000 Schedule M-1 Balance Check Figure 0 $0 $ (75,000) (345,000) (55,000) (10,000) (20,000) (100,000) (20,000) (12,000) (637,000) $139,000 219,000 1 0 $0 0 $0 Form 1065 2 Form Form 1065 Form 1065 Form 1065 Form 1065 Form 1065 Form 1065 Form 1065 Form 1065 Form 1065 Form 1065 Form 1065 Form 1065 Form 1065 Form 1065 Form 1065 Form 1065 Form 1065 Form 1125-A Sch. K-1 Sch. K-1 Sch. K-1 Sch. K-1 Sch. K-1 Sch. K-1 Sch. K-1 Sch. K-1 Sch. K-1 Sch. K-1 Sch. K-1 Sch. K-1 2015 Return Page Line 1 3 1 21 Sch K 4 Sch K 5 Sch K 6a Sch K 6b Sch K 8 Sch K 9a Sch K 13a Sch K 13b Sch K 18a Sch K 18c Sch K 19a 5 1 5 14(d) 5 21(d) Sch M-1 9 1 2 part III 1 part III 4 part III 6a part III 6b part III 8 part III 9a part III 13A part III 13H part III 13U part III 13V part III 14A part III 20A Entry 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 - Check figure $ 3,911,700 3 Enter your answers from your tax return in the appropriate spaces in column D. Enter all as positive numbers rounded to the nearest dollar. 4 ACCT 346 Tax Return Information- Part 2 (Partnership) Summer 2016 Tax Return Case Study1 Part 2 -- Form 1065 During the year ended 12/31/2015, Research Associates: Paid partner draws of $198,000 to Ms. Maine and $22,000 to Dr. Rue. Made guaranteed payments of $50,000 to Ms. Maine and $25,000 to Dr. Rue. Received exempt municipal interest income of $5,000. Received dividend income of $30,000 from Marvelous Cures, Inc. (in which Research has a 30% ownership interest) and $20,000 from corporations in which Research has a 20% ownership interest. All dividends are qualified dividends. Paid no salaries/wages attributable to inventories. Calculated cost recovery using MACRS of $90,000. Also note that the partners had $396,000 (Ms. Maine) and $44,000 (Dr. Rue) in their capital accounts at the beginning of the year. The partnership's balance sheets and income statement are presented in Exhibits 3 and 4, respectively. Exhibit 3 Research Associates Balance Sheet Years ended December 31, 2014 and 2015 Balances as of ASSETS Cash Inventory Depreciable assets (net) TOTAL ASSETS LIABILITIES & RETAINED EARNINGS Accounts payable (inventory) Notes payable Partners' capital TOTAL LIABILITIES & PARTNERS' CAPITAL 1 12/31/2014 $25,000 $150,000 $300,000 $475,000 12/31/2015 $71,000 $100,000 $200,000 $371,000 $10,000 $25,000 $440,000 $12,000 $0 $359,000 $475,000 $371,000 ACCT 346 Tax Return Information- Part 2 (Partnership) Summer 2016 Exhibit 4 Research Associates Income Statement Year ended December 31, 2015 Gross receipts Cost-of-Goods Sold Dividend Income Interest Income Capital losses $1,000,000 (250,000) 50,000 11,000 (35,000) Salaries and wages Guaranteed Payments Rents Property taxes Utilities Depreciation Charitable contributions Investment interest expense ($345,000) (75,000) (55,000) (10,000) (20,000) (100,000) (20,000) (12,000) $776,000 ($637,000) $139,000 Property Transactions Item Purchase** Price - Date Sale Price - Date 100 shares of CYA stock $3,000 - 1/1/2000 $7,000 - 1/15/2015 2,000 shares of ABZ stock $100,000 - 6/30/2000 $54,000 - 6/29/2015 City of LA Bonds $25,000 - 10/15/2014 $22,000 - 2/14/2015 2 $125,000 - 5/30/2014 $135,000 - 10/31/2015 **The taxpayer received 1099s for these transactions, but the basis was not reported to the IRS. 2 ACCT 346 Tax Return Information- Part 2 (Partnership) Section 199 Information Domestic Production Gross Receipts Summer 2016 $317,463 Allocable Cost of Goods Sold $63,493 Deductions Allocable to DPGR $142,858 W-2 Wages Related to QPAI $40,000 Required Use the information presented to prepare the assigned pages of the Form 1065 and Schedule D. Also prepare one Schedule K-1 (Form 1065) for Ms. Maine. (You will not be filing a complete return.) Use PDF forms from the IRS web site. 3 Form 8949 Department of the Treasury Internal Revenue Service Sales and Other Dispositions of Capital Assets Information about Form 8949 and its separate instructions is at www.irs.gov/form8949. File with your Schedule D to list your transactions for lines 1b, 2, 3, 8b, 9, and 10 of Schedule D. OMB No. 1545-0074 2015 Attachment Sequence No. 12A Social security number or taxpayer identification number Name(s) shown on return Before you check Box A, B, or C below, see whether you received any Form(s) 1099-B or substitute statement(s) from your broker. A substitute statement will have the same information as Form 1099-B. Either will show whether your basis (usually your cost) was reported to the IRS by your broker and may even tell you which box to check. Part I Short-Term. Transactions involving capital assets you held 1 year or less are short term. For long-term transactions, see page 2. Note: You may aggregate all short-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS and for which no adjustments or codes are required. Enter the totals directly on Schedule D, line 1a; you aren't required to report these transactions on Form 8949 (see instructions). You must check Box A, B, or C below. Check only one box. If more than one box applies for your short-term transactions, complete a separate Form 8949, page 1, for each applicable box. If you have more short-term transactions than will fit on this page for one or more of the boxes, complete as many forms with the same box checked as you need. (A) Short-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS (see Note above) (B) Short-term transactions reported on Form(s) 1099-B showing basis was not reported to the IRS (C) Short-term transactions not reported to you on Form 1099-B 1 (a) Description of property (Example: 100 sh. XYZ Co.) (b) Date acquired (Mo., day, yr.) (c) Date sold or disposed of (Mo., day, yr.) (d) Proceeds (sales price) (see instructions) Adjustment, if any, to gain or loss. If you enter an amount in column (g), (e) (h) enter a code in column (f). Cost or other basis. Gain or (loss). See the separate instructions. See the Note below Subtract column (e) and see Column (e) from column (d) and (f) (g) in the separate combine the result Code(s) from instructions with column (g) Amount of instructions adjustment 2 Totals. Add the amounts in columns (d), (e), (g), and (h) (subtract negative amounts). Enter each total here and include on your Schedule D, line 1b (if Box A above is checked), line 2 (if Box B above is checked), or line 3 (if Box C above is checked) Note: If you checked Box A above but the basis reported to the IRS was incorrect, enter in column (e) the basis as reported to the IRS, and enter an adjustment in column (g) to correct the basis. See Column (g) in the separate instructions for how to figure the amount of the adjustment. For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 37768Z Form 8949 (2015) Attachment Sequence No. 12A Form 8949 (2015) Name(s) shown on return. Name and SSN or taxpayer identification no. not required if shown on other side Page 2 Social security number or taxpayer identification number Before you check Box D, E, or F below, see whether you received any Form(s) 1099-B or substitute statement(s) from your broker. A substitute statement will have the same information as Form 1099-B. Either will show whether your basis (usually your cost) was reported to the IRS by your broker and may even tell you which box to check. Part II Long-Term. Transactions involving capital assets you held more than 1 year are long term. For short-term transactions, see page 1. Note: You may aggregate all long-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS and for which no adjustments or codes are required. Enter the totals directly on Schedule D, line 8a; you aren't required to report these transactions on Form 8949 (see instructions). You must check Box D, E, or F below. Check only one box. If more than one box applies for your long-term transactions, complete a separate Form 8949, page 2, for each applicable box. If you have more long-term transactions than will fit on this page for one or more of the boxes, complete as many forms with the same box checked as you need. (D) Long-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS (see Note above) (E) Long-term transactions reported on Form(s) 1099-B showing basis was not reported to the IRS (F) Long-term transactions not reported to you on Form 1099-B 1 (a) Description of property (Example: 100 sh. XYZ Co.) (b) Date acquired (Mo., day, yr.) (c) Date sold or disposed of (Mo., day, yr.) (d) Proceeds (sales price) (see instructions) Adjustment, if any, to gain or loss. If you enter an amount in column (g), (e) (h) enter a code in column (f). Cost or other basis. Gain or (loss). See the separate instructions. See the Note below Subtract column (e) and see Column (e) from column (d) and (f) (g) in the separate combine the result Code(s) from instructions with column (g) Amount of instructions adjustment 2 Totals. Add the amounts in columns (d), (e), (g), and (h) (subtract negative amounts). Enter each total here and include on your Schedule D, line 8b (if Box D above is checked), line 9 (if Box E above is checked), or line 10 (if Box F above is checked) Note: If you checked Box D above but the basis reported to the IRS was incorrect, enter in column (e) the basis as reported to the IRS, and enter an adjustment in column (g) to correct the basis. See Column (g) in the separate instructions for how to figure the amount of the adjustment. Form 8949 (2015) 1065 U.S. Return of Partnership Income Form Department of the Treasury Internal Revenue Service A Principal business activity For calendar year 2015, or tax year beginning B Principal product or service Type or Print C Business code number a OMB No. 1545-0123 , 2015, ending , 20 2015 . Information about Form 1065 and its separate instructions is at www.irs.gov/form1065. Name of partnership D Employer identification number Number, street, and room or suite no. If a P.O. box, see the instructions. E Date business started City or town, state or province, country, and ZIP or foreign postal code F Total assets (see the instructions) $ G H I J (1) Initial return (2) Final return (3) Name change (4) Address change (5) Technical termination - also check (1) or (2) (6) Other (specify) a Check accounting method: (1) Cash (2) Accrual (3) Number of Schedules K-1. Attach one for each person who was a partner at any time during the tax year a Check applicable boxes: Check if Schedules C and M-3 are attached . . . . . . . . . . . . . . . . . . . . . . . Amended return . . . . . Deductions (see the instructions for limitations) Income Caution. Include only trade or business income and expenses on lines 1a through 22 below. See the instructions for more information. 1a b c 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16a b 17 18 19 20 21 22 Signature of general partner or limited liability company member manager Print/Type preparer's name Firm's name Preparer's signature F Paid Preparer Use Only 1c 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16c 17 18 19 20 21 22 Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than general partner or limited liability company member manager) is based on all information of which preparer has any knowledge. F Sign Here 1a Gross receipts or sales . . . . . . . . . . . . . Returns and allowances . . . . . . . . . . . . 1b Balance. Subtract line 1b from line 1a . . . . . . . . . . . . . . . . . . Cost of goods sold (attach Form 1125-A) . . . . . . . . . . . . . . . . Gross profit. Subtract line 2 from line 1c . . . . . . . . . . . . . . . . . Ordinary income (loss) from other partnerships, estates, and trusts (attach statement) . . Net farm profit (loss) (attach Schedule F (Form 1040)) . . . . . . . . . . . . Net gain (loss) from Form 4797, Part II, line 17 (attach Form 4797) . . . . . . . . Other income (loss) (attach statement) . . . . . . . . . . . . . . . . . Total income (loss). Combine lines 3 through 7 . . . . . . . . . . . . . . Salaries and wages (other than to partners) (less employment credits) . . . . . . . Guaranteed payments to partners . . . . . . . . . . . . . . . . . . . Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . Bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . . Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation (if required, attach Form 4562) . . . . . . 16a Less depreciation reported on Form 1125-A and elsewhere on return 16b Depletion (Do not deduct oil and gas depletion.) . . . . . . . . . . . . . Retirement plans, etc. . . . . . . . . . . . . . . . . . . . . . . . Employee benefit programs . . . . . . . . . . . . . . . . . . . . . Other deductions (attach statement) . . . . . . . . . . . . . . . . . . Total deductions. Add the amounts shown in the far right column for lines 9 through 20 . Ordinary business income (loss). Subtract line 21 from line 8 . . . . . . . . . May the IRS discuss this return with the preparer shown below (see instructions)? Yes No Date Date PTIN Firm's EIN a a Firm's address a For Paperwork Reduction Act Notice, see separate instructions. Check if self-employed Phone no. Cat. No. 11390Z Form 1065 (2015) Form 1065 (2015) Schedule B 1 a c e 2 3 a Page 2 Other Information What type of entity is filing this return? Check the applicable box: Domestic general partnership b Domestic limited partnership Domestic limited liability company d Domestic limited liability partnership Foreign partnership f Other a At any time during the tax year, was any partner in the partnership a disregarded entity, a partnership (including an entity treated as a partnership), a trust, an S corporation, an estate (other than an estate of a deceased partner), or a nominee or similar person? . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No At the end of the tax year: Did any foreign or domestic corporation, partnership (including any entity treated as a partnership), trust, or taxexempt organization, or any foreign government own, directly or indirectly, an interest of 50% or more in the profit, loss, or capital of the partnership? For rules of constructive ownership, see instructions. If \"Yes,\" attach Schedule B-1, Information on Partners Owning 50% or More of the Partnership . . . . . . . . . . . . . . . b Did any individual or estate own, directly or indirectly, an interest of 50% or more in the profit, loss, or capital of the partnership? For rules of constructive ownership, see instructions. If \"Yes,\" attach Schedule B-1, Information on Partners Owning 50% or More of the Partnership . . . . . . . . . . . . . . . . . . . . 4 a At the end of the tax year, did the partnership: Own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of stock entitled to vote of any foreign or domestic corporation? For rules of constructive ownership, see instructions. If \"Yes,\" complete (i) through (iv) below . . . . . . . . . . . . . . . . . . . . . (i) Name of Corporation (ii) Employer Identification Number (if any) (iii) Country of Incorporation (iv) Percentage Owned in Voting Stock b Own directly an interest of 20% or more, or own, directly or indirectly, an interest of 50% or more in the profit, loss, or capital in any foreign or domestic partnership (including an entity treated as a partnership) or in the beneficial interest of a trust? For rules of constructive ownership, see instructions. If \"Yes,\" complete (i) through (v) below . . (i) Name of Entity (ii) Employer Identification Number (if any) (iii) Type of Entity (iv) Country of Organization (v) Maximum Percentage Owned in Profit, Loss, or Capital Yes 5 No Did the partnership file Form 8893, Election of Partnership Level Tax Treatment, or an election statement under section 6231(a)(1)(B)(ii) for partnership-level tax treatment, that is in effect for this tax year? See Form 8893 for more details . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Does the partnership satisfy all four of the following conditions? a The partnership's total receipts for the tax year were less than $250,000. b The partnership's total assets at the end of the tax year were less than $1 million. c Schedules K-1 are filed with the return and furnished to the partners on or before the due date (including extensions) for the partnership return. d The partnership is not filing and is not required to file Schedule M-3 . . . . . . . . . . . . . . . If \"Yes,\" the partnership is not required to complete Schedules L, M-1, and M-2; Item F on page 1 of Form 1065; or Item L on Schedule K-1. 7 Is this partnership a publicly traded partnership as defined in section 469(k)(2)? . . . . . . . . . . . . During the tax year, did the partnership have any debt that was cancelled, was forgiven, or had the terms 8 modified so as to reduce the principal amount of the debt? . . . . . . . . . . . . . . . . . . Has this partnership filed, or is it required to file, Form 8918, Material Advisor Disclosure Statement, to provide 9 information on any reportable transaction? . . . . . . . . . . . . . . . . . . . . . . . . 10 At any time during calendar year 2015, did the partnership have an interest in or a signature or other authority over a financial account in a foreign country (such as a bank account, securities account, or other financial account)? See the instructions for exceptions and filing requirements for FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). If \"Yes,\" enter the name of the foreign country. a Form 1065 (2015) Form 1065 (2015) Schedule B Page Yes 11 3 Other Information (continued) No At any time during the tax year, did the partnership receive a distribution from, or was it the grantor of, or transferor to, a foreign trust? If \"Yes,\" the partnership may have to file Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. See instructions . . . . . . . . . 12a Is the partnership making, or had it previously made (and not revoked), a section 754 election? . . . . . . See instructions for details regarding a section 754 election. b Did the partnership make for this tax year an optional basis adjustment under section 743(b) or 734(b)? If \"Yes,\" attach a statement showing the computation and allocation of the basis adjustment. See instructions . . . . c 13 14 15 16 17 Is the partnership required to adjust the basis of partnership assets under section 743(b) or 734(b) because of a substantial built-in loss (as defined under section 743(d)) or substantial basis reduction (as defined under section 734(d))? If \"Yes,\" attach a statement showing the computation and allocation of the basis adjustment. See instructions Check this box if, during the current or prior tax year, the partnership distributed any property received in a like-kind exchange or contributed such property to another entity (other than disregarded entities wholly owned by the partnership throughout the tax year) . . . . . . . . . . . . . . . . . . . a At any time during the tax year, did the partnership distribute to any partner a tenancy-in-common or other undivided interest in partnership property? . . . . . . . . . . . . . . . . . . . . . . . . If the partnership is required to file Form 8858, Information Return of U.S. Persons With Respect To Foreign Disregarded Entities, enter the number of Forms 8858 attached. See instructions a Does the partnership have any foreign partners? If \"Yes,\" enter the number of Forms 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, filed for this partnership. a Enter the number of Forms 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships, attached to this return. a 18a Did you make any payments in 2015 that would require you to file Form(s) 1099? See instructions . . . . . b If \"Yes,\" did you or will you file required Form(s) 1099? . . . . . . . . . . . . . . . . . . . . Enter the number of Form(s) 5471, Information Return of U.S. Persons With Respect To Certain Foreign 19 Corporations, attached to this return. a 20 Enter the number of partners that are foreign governments under section 892. a Designation of Tax Matters Partner (see instructions) Enter below the general partner or member-manager designated as the tax matters partner (TMP) for the tax year of this return: Phone number of TMP F F Address of designated TMP F If the TMP is an entity, name of TMP representative Identifying number of TMP F F Name of designated TMP Form 1065 (2015) Attachment Sequence No. 12A Form 8949 (2015) Name(s) shown on return. Name and SSN or taxpayer identification no. not required if shown on other side Page 2 Social security number or taxpayer identification number Before you check Box D, E, or F below, see whether you received any Form(s) 1099-B or substitute statement(s) from your broker. A substitute statement will have the same information as Form 1099-B. Either will show whether your basis (usually your cost) was reported to the IRS by your broker and may even tell you which box to check. Part II Long-Term. Transactions involving capital assets you held more than 1 year are long term. For short-term transactions, see page 1. Note: You may aggregate all long-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS and for which no adjustments or codes are required. Enter the totals directly on Schedule D, line 8a; you aren't required to report these transactions on Form 8949 (see instructions). You must check Box D, E, or F below. Check only one box. If more than one box applies for your long-term transactions, complete a separate Form 8949, page 2, for each applicable box. If you have more long-term transactions than will fit on this page for one or more of the boxes, complete as many forms with the same box checked as you need. (D) Long-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS (see Note above) (E) Long-term transactions reported on Form(s) 1099-B showing basis was not reported to the IRS (F) Long-term transactions not reported to you on Form 1099-B 1 (a) Description of property (Example: 100 sh. XYZ Co.) (b) Date acquired (Mo., day, yr.) (c) Date sold or disposed of (Mo., day, yr.) (d) Proceeds (sales price) (see instructions) Adjustment, if any, to gain or loss. If you enter an amount in column (g), (e) (h) enter a code in column (f). Cost or other basis. Gain or (loss). See the separate instructions. See the Note below Subtract column (e) and see Column (e) from column (d) and (f) (g) in the separate combine the result Code(s) from instructions with column (g) Amount of instructions adjustment 2 Totals. Add the amounts in columns (d), (e), (g), and (h) (subtract negative amounts). Enter each total here and include on your Schedule D, line 8b (if Box D above is checked), line 9 (if Box E above is checked), or line 10 (if Box F above is checked) a Note: If you checked Box D above but the basis reported to the IRS was incorrect, enter in column (e) the basis as reported to the IRS, and enter an adjustment in column (g) to correct the basis. See Column (g) in the separate instructions for how to figure the amount of the adjustment. Form 8949 (2015) Form 1065 (2015) Schedule K 1 2 3a Income (Loss) b c 4 5 6 7 8 9a Alternative Other Information Minimum Tax (AMT) Items Foreign Transactions Credits SelfEmploy- Deductions ment b c 10 11 12 13a b c d 14a b c 15a b c d e f 16a b c d g i l m n 17a b c d e f 18a b c 19a b 20a b c Page Partners' Distributive Share Items 4 Total amount Ordinary business income (loss) (page 1, line 22) . . . . . . . . . . . . . 1 Net rental real estate income (loss) (attach Form 8825) . . . . . . . . . . . 2 Other gross rental income (loss) . . . . . . . . 3a Expenses from other rental activities (attach statement) 3b Other net rental income (loss). Subtract line 3b from line 3a . . . . . . . . . 3c Guaranteed payments . . . . . . . . . . . . . . . . . . . . . 4 Interest income . . . . . . . . . . . . . . . . . . . . . . . . 5 Dividends: 6a a Ordinary dividends . . . . . . . . . . . . . . . . . . . . . . . 6b b Qualified dividends Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Net short-term capital gain (loss) (attach Schedule D (Form 1065)) . . . . . . . 8 Net long-term capital gain (loss) (attach Schedule D (Form 1065)) . . . . . . . 9a Collectibles (28%) gain (loss) . . . . . . . . . 9b Unrecaptured section 1250 gain (attach statement) . . 9c Net section 1231 gain (loss) (attach Form 4797) . . . . . . . . . . . . . 10 Other income (loss) (see instructions) Type a 11 Section 179 deduction (attach Form 4562) . . . . . . . . . . . . . . . 12 Contributions . . . . . . . . . . . . . . . . . . . . . . . . 13a Investment interest expense . . . . . . . . . . . . . . . . . . . 13b (1) Type a Section 59(e)(2) expenditures: (2) Amount a 13c(2) Other deductions (see instructions) Type a 13d Net earnings (loss) from self-employment . . . . . . . . . . . . . . . 14a Gross farming or fishing income . . . . . . . . . . . . . . . . . . 14b Gross nonfarm income . . . . . . . . . . . . . . . . . . . . . 14c Low-income housing credit (section 42(j)(5)) . . . . . . . . . . . . . . 15a Low-income housing credit (other) . . . . . . . . . . . . . . . . . 15b Qualified rehabilitation expenditures (rental real estate) (attach Form 3468, if applicable) 15c Type a 15d Other rental real estate credits (see instructions) Type a Other rental credits (see instructions) 15e Other credits (see instructions) Type a 15f Name of country or U.S. possession a Gross income from all sources . . . . . . . . . . . . . . . . . . . 16b Gross income sourced at partner level . . . . . . . . . . . . . . . . 16c Foreign gross income sourced at partnership level e General category a f Other a 16f Passive category a Deductions allocated and apportioned at partner level h Other . . . . . . . . . . a 16h Interest expense a Deductions allocated and apportioned at partnership level to foreign source income k Other a 16k Passive category a j General category a a Total foreign taxes (check one): Paid Accrued . . . . . . . . 16l Reduction in taxes available for credit (attach statement) . . . . . . . . . . 16m Other foreign tax information (attach statement) . . . . . . . . . . . . . Post-1986 depreciation adjustment . . . . . . . . . . . . . . . . . 17a Adjusted gain or loss . . . . . . . . . . . . . . . . . . . . . . 17b Depletion (other than oil and gas) . . . . . . . . . . . . . . . . . . 17c Oil, gas, and geothermal propertiesgross income . . . . . . . . . . . . 17d Oil, gas, and geothermal propertiesdeductions . . . . . . . . . . . . . 17e Other AMT items (attach statement) . . . . . . . . . . . . . . . . . 17f Tax-exempt interest income . . . . . . . . . . . . . . . . . . . . 18a Other tax-exempt income . . . . . . . . . . . . . . . . . . . . 18b Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . 18c Distributions of cash and marketable securities . . . . . . . . . . . . . 19a Distributions of other property . . . . . . . . . . . . . . . . . . . 19b Investment income . . . . . . . . . . . . . . . . . . . . . . . 20a Investment expenses . . . . . . . . . . . . . . . . . . . . . . 20b Other items and amounts (attach statement) . . . . . . . . . . . . . . Form 1065 (2015) Form 1065 (2015) Page 5 Analysis of Net Income (Loss) Net income (loss). Combine Schedule K, lines 1 through 11. From the result, subtract the sum of Schedule K, lines 12 through 13d, and 16l . . . . . . . . . . . . . . . . . . 1 Analysis by (ii) Individual (iii) Individual (v) Exempt (i) Corporate (iv) Partnership (active) (passive) Organization partner type: 1 2 (vi) Nominee/Other a General partners b Limited partners Schedule L 1 2a b 3 4 5 6 7a b 8 9a b 10a b 11 12a b 13 14 15 16 17 18 19a b 20 21 22 Assets Cash . . . . . . . . . . . . . Trade notes and accounts receivable . . . Less allowance for bad debts . . . . . Inventories . . . . . . . . . . . U.S. government obligations . . . . . Tax-exempt securities . . . . . . . Other current assets (attach statement) . . Loans to partners (or persons related to partners) Mortgage and real estate loans . . . . Other investments (attach statement) . . . Buildings and other depreciable assets . . Less accumulated depreciation . . . . Depletable assets . . . . . . . . . Less accumulated depletion . . . . . Land (net of any amortization) . . . . . Intangible assets (amortizable only) . . . Less accumulated amortization . . . . Other assets (attach statement) . . . . Total assets . . . . . . . . . . . Liabilities and Capital Accounts payable . . . . . . . . . Other current liabilities (attach statement) All nonrecourse loans . . . . . . . Other liabilities (attach statement) . Partners' capital accounts . . . Total liabilities and capital . . . . . . (d) . . . . . . . . Reconciliation of Income (Loss) per Books With Income (Loss) per Return Note. The partnership may be required to file Schedule M-3 (see instructions). Net income (loss) per books . . . . Income recorded on books this year not included 6 Income included on Schedule K, lines 1, 2, 3c, 5, 6a, 7, 8, 9a, 10, and 11, not recorded on books this year (itemize): 3 Guaranteed payments (other than health insurance) . . . . . . . 4 Expenses recorded on books this year not included on Schedule K, lines 1 through 13d, and 16l (itemize): a Depreciation $ b Travel and entertainment $ 5 Add lines 1 through 4 . . . Schedule M-2 3 4 5 End of tax year (c) Loans from partners (or persons related to partners) Mortgages, notes, bonds payable in 1 year or more 2 1 2 Beginning of tax year (a) (b) Mortgages, notes, bonds payable in less than 1 year Schedule M-1 1 Balance Sheets per Books . . on Schedule K, lines 1 through 11 (itemize): a Tax-exempt interest $ a Deductions included on Schedule K, lines 1 through 13d, and 16l, not charged against book income this year (itemize): Depreciation $ 7 8 9 Add lines 6 and 7 . . . . . . . . Income (loss) (Analysis of Net Income (Loss), line 1). Subtract line 8 from line 5 . 6 Distributions: a Cash . . b Property . Other decreases (itemize): . . . . . . . . Add lines 6 and 7 . . . . . . Analysis of Partners' Capital Accounts Balance at beginning of year . Capital contributed: a Cash . b Property Net income (loss) per books . . Other increases (itemize): Add lines 1 through 4 . . . . . . . . . . . . . . 7 8 9 . . . Balance at end of year. Subtract line 8 from line 5 Form 1065 (2015) Form 1125-A (Rev. December 2012) Department of the Treasury Internal Revenue Service Name Cost of Goods Sold Employer identification number 1 2 Inventory at beginning of year Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 3 4 5 Cost of labor . . . . . . . . . . . Additional section 263A costs (attach schedule) . Other costs (attach schedule) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 4 5 6 7 Total. Add lines 1 through 5 . Inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 7 8 Cost of goods sold. Subtract line 7 from line 6. Enter here and on Form 1120, page 1, line 2 or the appropriate line of your tax return (see instructions) . . . . . . . . . . . . . . . Check all methods used for valuing closing inventory: (i) Cost 9a OMB No. 1545-2225 Attach to Form 1120, 1120-C, 1120-F, 1120S, 1065, or 1065-B. a Information about Form 1125-A and its instructions is at www.irs.gov/form1125a. a . . . . . . . . . . . . . . . . . . . . . . 8 b Lower of cost or market (ii) Other (Specify method used and attach explanation.) a (iii) Check if there was a writedown of subnormal goods . . . . . . . . . . a c Check if the LIFO inventory method was adopted this tax year for any goods (if checked, attach Form 970) . . . . . . a d If the LIFO inventory method was used for this tax year, enter amount of closing inventory computed under LIFO . . . . . . . . . . . . . . . . . . . . . . . . . . . 9d If property is produced or acquired for resale, do the rules of section 263A apply to the entity (see instructions)? . . e f . . . . . . . . . . . . Was there any change in determining quantities, cost, or valuations between opening and closing inventory? If \"Yes,\" attach explanation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section references are to the Internal Revenue Code unless otherwise noted. General Instructions Purpose of Form Use Form 1125-A to calculate and deduct cost of goods sold for certain entities. Who Must File Filers of Form 1120, 1120-C, 1120-F, 1120S, 1065, or 1065-B, must complete and attach Form 1125-A if the applicable entity reports a deduction for cost of goods sold. Inventories Generally, inventories are required at the beginning and end of each tax year if the production, purchase, or sale of merchandise is an income-producing factor. See Regulations section 1.471-1. If inventories are required, you generally must use an accrual method of accounting for sales and purchases of inventory items. Exception for certain taxpayers. If you are a qualifying taxpayer or a qualifying small business taxpayer (defined below), you can adopt or change your accounting method to account for inventoriable items in the same manner as materials and supplies that are not incidental. Under this accounting method, inventory costs for raw materials purchased for use in producing finished goods and merchandise purchased for resale are deductible in the year the finished goods or merchandise are sold (but not before the year you paid for the raw materials or merchandise, if you are also using the cash method). If you account for inventoriable items in the same manner as materials and supplies that are not incidental, you can currently deduct expenditures for direct labor and all indirect costs that would otherwise be included in inventory costs. See the instructions for lines 2 and 7. For additional guidance on this method of accounting, see Pub. 538, Accounting Periods and Methods. For guidance on adopting or changing to this method of accounting, see Form 3115, Application for Change in Accounting Method, and its instructions. Qualifying taxpayer. A qualifying taxpayer is a taxpayer that, (a) for each prior tax year ending after December 16, 1998, has average annual gross receipts of $1 million or less for the 3 prior tax years and (b) its business is not a tax shelter (as defined in section 448(d)(3)). See Rev. Proc. 2001-10, 2001-2 I.R.B. 272. Qualifying small business taxpayer. A qualifying small business taxpayer is a taxpayer that, (a) for each prior tax year For Paperwork Reduction Act Notice, see instructions. Cat. No. 55988R Yes No Yes No ending on or after December 31, 2000, has average annual gross receipts of $10 million or less for the 3 prior tax years, (b) whose principal business activity is not an ineligible activity, and (c) whose business is not a tax shelter (as defined in section 448 (d)(3)). See Rev. Proc. 2002-28, 2002-18 I.R.B. 815. Uniform capitalization rules. The uniform capitalization rules of section 263A generally require you to capitalize, or include in inventory, certain costs incurred in connection with the following. The production of real property and tangible personal property held in inventory or held for sale in the ordinary course of business. Real property or personal property (tangible and intangible) acquired for resale. The production of real property and tangible personal property by a corporation for use in its trade or business or in an activity engaged in for profit. See the discussion on section 263A uniform capitalization rules in the instructions for your tax return before completing Form 1125-A. Also see Regulations sections 1.263A-1 through 1.263A-3. See Regulations section 1.263A-4 for rules for property produced in a farming business. Form 1125-A (Rev. 12-2012) Form 1125-A (Rev. 12-2012) Specific Instructions Line 1. Inventory at Beginning of Year If you are changing your method of accounting for the current tax year, you must refigure last year's closing inventory using the new method of accounting. Enter the result on line 1. If there is a difference between last year's closing inventory and the refigured amount, attach an explanation and take it into account when figuring any section 481(a) adjustment. Line 2. Purchases If you account for inventoriable items in the same manner as materials and supplies that are not incidental, enter amounts paid for all raw materials and merchandise during the tax year on line 2. The amount you can deduct for the tax year is figured on line 8. Reduce purchases by items withdrawn for personal use. For a partnership, the cost of these items should be shown on Schedule K and Schedule K-1 as distributions to partners. Line 4. Additional Section 263A Costs If you elected a simplified method of accounting, enter on line 4 the balance of section 263A costs paid or incurred during the tax year not includible on lines 2, 3, and 5. If you elected the simplified production method, additional section 263A costs are generally those costs, other than interest, that were not capitalized under your method of accounting immediately prior to the effective date of section 263A, but are now required to be capitalized under section 263A. For details, see Regulations section 1.263A-2(b). If you elected the simplified resale method, additional section 263A costs are generally those costs incurred with respect to the following categories. Off-site storage or warehousing. Purchasing. Handling, such as processing, assembling, repackaging, and transporting. General and administrative costs (mixed service costs). Line 5. Other Costs Enter on line 5 any costs paid or incurred during the tax year not entered on lines 2 through 4. Attach a statement listing details of the costs. Special Rules for Cooperatives Cooperatives are allowed to deduct certain per-unit retain allocations. Include these costs on line 5. Attach a statement listing details of per-unit retain allocations paid in: Qualified per-unit retain certificates, Money or other property (except nonqualified per-unit certificates), and Nonqualified per-unit retain certificates redeemed this year. Page Per-unit retain allocations. A cooperative is allowed to deduct from its taxable income amounts paid during the payment period for the tax year as per-unit retain allocations to the extent paid in money, qualified per-unit retain certificates or other property with respect to marketing occurring during such tax year. A per-unit retain allocation is any allocation from a cooperative to a patron with respect to products marketed for him without reference to the cooperative net earnings. A qualified per-unit retain certificate is any per-unit retain certificate that the distributee has agreed to take into account at its stated dollar amount. Nonqualified per-unit retain certificates redeemed this year. Include the amount paid in money or other property (except amounts already included as per-unit retain certificates) to patrons to redeem nonqualified per-unit retain certificates. No deduction is allowed at the time of issuance for a nonqualified per-unit retain certificate. However, the cooperative may take a deduction in the year the certificate is redeemed, subject to the stated dollar amount of the certificate. See section 1383. Also see the instructions for line 29h of Form 1120-C, U.S. Income Tax Return for Cooperative Associations, for a special rule for figuring the cooperative's tax in the year of redemption of a nonqualified per-unit retain certificate. Line 7. Inventory at End of Year See Regulations sections 1.263A-1 through 1.263A-3 for details on figuring the amount of additional section 263A costs to be included in ending inventory. If you account for inventoriable items in the same manner as materials and supplies that are not incidental, enter on line 7 the portion of your raw materials and merchandise purchased for resale that was included in the total on line 6 but was not sold during the year. Line 8. Cost of Goods Sold Enter the amount from line 8 on your tax return as follows. Filers of Form 1120, 1120-C, 1120S, 1065, and 1065-B, enter cost of goods sold on page 1, line 2. Filers of Form 1120-F, enter cost of goods sold on page 3, Section II, line 2. Lines 9a Through 9f. Inventory Valuation Methods Inventories can be valued at: Cost, Cost or market value (whichever is lower), or Any other method approved by the IRS that conforms to the requirements of the applicable regulations cited below. However, if you are using the cash method of accounting, you are required to use cost. Rolling average method. Generally, a rolling average method that is used to value inventories for financial accounting purposes does not clearly reflect income for federal income tax purposes. 2 However, if a filer uses the average cost method for financial accounting purposes, there are safe harbors under which this method will be deemed to clearly reflect income for federal income tax purposes. For details, see Rev. Proc. 2008-43, 2008-30 I.R.B. 186 as modified by Rev. Proc. 2008-52, 2008-36 I.R.B. 587, as modified by Rev. Proc. 2011-14, 2011-4 I.R.B. 330, or a successor. Filers that use erroneous valuation methods must change to a method permitted for federal income tax purposes. Use Form 3115 to make this change. For more information on inventory valuation methods, see Pub. 538. For more information on changes in the method of accounting for inventory, see Form 3115 and the Instructions for Form 3115. Line 9a. Method of valuing closing inventory. On line 9a, check the method(s) used for valuing inventories. Under lower of cost or market, the term \"market\" (for normal goods) means the current bid price prevailing on the inventory valuation date for the particular merchandise in the volume usually purchased by the filer. For a manufacturer, market applies to the basic elements of costraw materials, labor, and burden. If section 263A applies, the basic elements of cost must reflect the current bid price of all direct costs and all indirect costs properly allocable to goods on hand at the inventory date. Inventory may be valued below cost when the merchandise is unsalable at normal prices or unusable in the normal way because the goods are subnormal due to damage, imperfections, shopwear, change of style, odd or broken lots, or other similar causes, including secondhand goods taken in exchange. The goods may be valued at the bona fide selling price, minus the direct cost of disposition (but not less than scrap value). Bona fide selling price means actual offering of goods during a period ending not later than 30 days after inventory date. Lines 9c and 9d. LIFO method. If this is the first year the Last-in, First-out, (LIFO) inventory method was either adopted or extended to inventory goods not previously valued under the LIFO method provided in section 472, attach Form 970, Application To Use LIFO Inventory Method, or a statement with the information required by Form 970. Check the LIFO box on line 9c. On line 9d, enter the amount of total closing inventories computed under section 472. Estimates are acceptable. If you changed or extended your inventory method to LIFO and had to write up the opening inventory to cost in the year of election, report the effect of the write-up as other income, on your applicable return, proportionately over a 3-year period that begins with the year of the LIFO election. Form 1125-A (Rev. 12-2012) Note. Entities using the LIFO method that make an S corporation election or transfer LIFO inventory to an S corporation in a nonrecognition transaction may be subject to an additional tax attributable to the LIFO recapture amount. See the instructions for Form 1120, Schedule J, line 11. Line 9e. If property is produced or acquired for resale and the rules of section 263A apply to the corporation, cooperative, partnership, or other applicable entity, check the "Yes" box on line 9e. Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United States. Page You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax. You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103. 3 The time needed to complete and file this form will vary depending on individual circumstances. The estimated average time is: Recordkeeping . . . . 4 hr., 18 min. Learning about the law or the form . . . . 1 hr., 33 min. Preparing and sending the form to the IRS . . . . . . 2 hr., 53 min. If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. See the instructions for the tax return with which this form is filed. Form 1125-A (Rev. December 2012) Department of the Treasury Internal Revenue Service Name Cost of Goods Sold Employer identification number 1 2 Inventory at beginning of year Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 3 4 5 Cost of labor . . . . . . . . . . . Additional section 263A costs (attach schedule) . Other costs (attach schedule) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 4 5 6 7 Total. Add lines 1 through 5 . Inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 7 8 Cost of goods sold. Subtract line 7 from line 6. Enter here and on Form 1120, page 1, line 2 or the appropriate line of your tax return (see instructions) . . . . . . . . . . . . . . . Check all methods used for valuing closing inventory: (i) Cost 9a OMB No. 1545-2225 Attach to Form 1120, 1120-C, 1120-F, 1120S, 1065, or 1065-B. a Information about Form 1125-A and its instructions is at www.irs.gov/form1125a. a . . . . . . . . . . . . . . . . . . . . . . 8 b Lower of cost or market (ii) Other (Specify method used and attach explanation.) a (iii) Check if there was a writedown of subnormal goods . . . . . . . . . . a c Check if the LIFO inventory method was adopted this tax year for any goods (if checked, attach Form 970) . . . . . . a d If the LIFO inventory method was used for this tax year, enter amount of closing inventory computed under LIFO . . . . . . . . . . . . . . . . . . . . . . . . . . . 9d If property is produced or acquired for resale, do the rules of section 263A apply to the entity (see instructions)? . . e f . . . . . . . . . . . . Was there any change in determining quantities, cost, or valuations between opening and closing inventory? If \"Yes,\" attach explanation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section references are to the Internal Revenue Code unless otherwise noted. General Instructions Purpose of Form Use Form 1125-A to calculate and deduct cost of goods sold for certain entities. Who Must File Filers of Form 1120, 1120-C, 1120-F, 1120S, 1065, or 1065-B, must complete and attach Form 1125-A if the applicable entity reports a deduction for cost of goods sold. Inventories Generally, inventories are required at the beginning and end of each tax year if the production, purchase, or sale of merchandise is an income-producing factor. See Regulations section 1.471-1. If inventories are required, you generally must use an accrual method of accounting for sales and purchases of inventory items. Exception for certain taxpayers. If you are a qualifying taxpayer or a qualifying small business taxpayer (defined below), you can adopt or change your accounting method to account for inventoriable items in the same manner as materials and supplies that are not incidental. Under this accounting method, inventory costs for raw materials purchased for use in producing finished goods and merchandise purchased for resale are deductible in the year the finished goods or merchandise are sold (but not before the year you paid for the raw materials or merchandise, if you are also using the cash method). If you account for inventoriable items in the same manner as materials and supplies that are not incidental, you can currently deduct expenditures for direct labor and all indirect costs that would otherwise be included in inventory costs. See the instructions for lines 2 and 7. For additional guidance on this method of accounting, see Pub. 538, Accounting Periods and Methods. For guidance on adopting or changing to this method of accounting, see Form 3115, Application for Change in Accounting Method, and its instructions. Qualifying taxpayer. A qualifying taxpayer is a taxpayer that, (a) for each prior tax year ending after December 16, 1998, has average annual gross receipts of $1 million or less for the 3 prior tax years and (b) its business is not a tax shelter (as defined in section 448(d)(3)). See Rev. Proc. 2001-10, 2001-2 I.R.B. 272. Qualifying small business taxpayer. A qualifying small business taxpayer is a taxpayer that, (a) for each prior tax year For Paperwork Reduction Act Notice, see instructions. Cat. No. 55988R Yes No Yes No ending on or after December 31, 2000, has average annual gross receipts of $10 million or less for the 3 prior tax years, (b) whose principal business activity is not an ineligible activity, and (c) whose business is not a tax shelter (as defined in section 448 (d)(3)). See Rev. Proc. 2002-28, 2002-18 I.R.B. 815. Uniform capitalization rules. The uniform capitalization rules of section 263A generally require you to capitalize, or include in inventory, certain costs incurred in connection with the following. The production of real property and tangible personal property held in inventory or held for sale in the ordinary course of business. Real property or personal property (tangible and intangible) acquired for resale. The production of real property and tangible personal property by a corporation for use in its trade or business or in an activity engaged in for profit. See the discussion on section 263A uniform capitalization rules in the instructions for your tax return before completing Form 1125-A. Also see Regulations sections 1.263A-1 through 1.263A-3. See Regulations section 1.263A-4 for rules for property produced in a farming business. Form 1125-A (Rev. 12-2012) Form 1125-A (Rev. 12-2012) Specific Instructions Line 1. Inventory at Beginning of Year If you are changing your method of accounting for the current tax year, you must refigure last year's closing inventory using the new method of accounting. Enter the result on line 1. If there is a difference between last year's closing inventory and the refigured amount, attach an explanation and take it into account when figuring any section 481(a) adjustment. Line 2. Purchases If you account for inventoriable items in the same manner as materials and supplies that are not incidental, enter amounts paid for all raw materials and merchandise during the tax year on line 2. The amount you can deduct for the tax year is figured on line 8. Reduce purchases by items withdrawn for personal use. For a partnership, the cost of these items should be shown on Schedule K and Schedule K-1 as distributions to partners. Line 4. Additional Section 263A Costs If you elected a simplified method of accounting, enter on line 4 the balance of section 263A costs paid or incurred during the tax year not includible on lines 2, 3, and 5. If you elected the simplified production method, additional section 263A costs are generally those costs, other than interest, that were not capitalized under your method of accounting immediately prior to the effective date of section 263A, but are now required to be capitalized under section 263A. For details, see Regulations section 1.263A-2(b). If you elected the simplified resale method, additional section 263A costs are generally those costs incurred with respect to the following categories. Off-site storage or warehousing. Purchasing. Handling, such as processing, assembling, repackaging, and transporting. General and administrative costs (mixed service costs). Line 5. Other Costs Enter on line 5 any costs paid or incurred during the tax year not entered on lines 2 through 4. Attach a statement listing details of the costs. Special Rules for Cooperatives Cooperatives are allowed to deduct certain per-unit retain allocations. Include these costs on line 5. Attach a statement listing details of per-unit retain allocations paid in: Qualified per-unit retain certificates, Money or other property (except nonqualified per-unit certificates), and Nonqualified per-unit retain certificates redeemed this year. Page Per-unit retain allocations. A cooperative is allowed to deduct from its taxable income amounts paid during the payment period for the tax year as per-unit retain allocations to the extent paid in money, qualified per-unit retain certificates or other property with respect to marketing occurring during such tax year. A per-unit retain allocation is any allocation from a cooperative to a patron with respect to products marketed for him without reference to the cooperative net earnings. A qualified per-unit retain certificate is any per-unit retain certificate that the distributee has agreed to take into account at its stated dollar amount. Nonqualified per-unit retain certificates redeemed this year. Include the amount paid in money or other property (except amounts already included as per-unit retain certificates) to patrons to redeem nonqualified per-unit retain certificates. No deduction is allowed at the time of issuance for a nonqualified per-unit retain certificate. However, the cooperative may take a deduction in the year the certificate is redeemed, subject to the stated dollar amount of the certificate. See section 1383. Also see the instructions for line 29h of Form 1120-C, U.S. Income Tax Return for Cooperative Associations, for a special rule for figuring the cooperative's tax in the year of redemption of a nonqualified per-unit retain certificate. Line 7. Inventory at End of Year See Regulations sections 1.263A-1 through 1.263A-3 for details on figuring the amount of additional section 263A costs to be included in ending inventory. If you account for inventoriable items in the same manner as materials and supplies that are not incidental, enter on line 7 the portion of your raw materials and merchandise purchased for resale that was included in the total on line 6 but was not sold during the year. Line 8. Cost of Goods Sold Enter the amount from line 8 on your tax return as follows. Filers of Form 1120, 1120-C, 1120S, 1065, and 1065-B, enter cost of goods sold on page 1, line 2. Filers of Form 1120-F, enter cost of goods sold on page 3, Section II, line 2. Lines 9a Through 9f. Inventory Valuation Methods Inventories can be valued at: Cost, Cost or market value (whichever is lower), or Any other method approved by the IRS that conforms to the requirements of the applicable regulations cited below. However, if you are using the cash method of accounting, you are required to use cost. Rolling average method. Generally, a rolling average method that is used to value inventories for financial accounting purposes does not clearly reflect income for federal income tax purposes. 2 However, if a filer uses the average cost method for financial accounting purposes, there are safe harbors under which this method will be deemed to clearly reflect income for federal income tax purposes. For details, see Rev. Proc. 2008-43, 2008-30 I.R.B. 186 as modified by Rev. Proc. 2008-52, 2008-36 I.R.B. 587, as modified by Rev. Proc. 2011-14, 2011-4 I.R.B. 330, or a successor. Filers that use erroneous valuation methods must change to a method permitted for federal income tax purposes. Use Form 3115 to make this change. For more information on inventory valuation methods, see Pub. 538. For more information on changes in the method of accounting for inventory, see Form 3115 and the Instructions for Form 3115. Line 9a. Method of valuing closing inventory. On line 9a, check the method(s) used for valuing inventories. Under lower of cost or market, the term \"market\" (for normal goods) means the current bid price prevailing on the inventory valuation date for the particular merchandise in the volume usually purchased by the filer. For a manufacturer, market applies to the basic elements of costraw materials, labor, and burden. If section 263A applies, the basic elements of cost must reflect the current bid price of all direct costs and all indirect costs properly allocable to goods on hand at the inventory date. Inventory may be valued below cost when the merchandise is unsalable at normal prices or unusable in the normal way because the goods are subnormal due to damage, imperfections, shopwear, change of style, odd or broken lots, or other similar causes, including secondhand goods taken in exchange. The goods may be valued at the bona fide selling price, minus the direct cost of disposition (but not less than scrap value). Bona fide selling price means actual offering of goods during a period ending not later than 30 days after inventory date. Lines 9c and 9d. LIFO method. If this is the first year the Last-in, First-out, (LIFO) inventory method was either adopted or extended to inventory goods not previously valued under the LIFO method provided in section 472, attach Form 970, Application To Use LIFO Inventory Method, or a statement with the information required by Form 970. Check the LIFO box on line 9c. On line 9d, enter the amount of total closing inventories computed under section 472. Estimates are acceptable. If you changed or extended your inventory method to LIFO and had to write up the opening inventory to cost in the year of election, report the effect of the write-up as other income, on your applicable return, proportionately over a 3-year period that begins with the year of the LIFO election. Form 1125-A (Rev. 12-2012) Note. Entities using the LIFO method that make an S corporation election or transfer LIFO inventory to an S corporation in a nonrecognition transaction may be subject to an additional tax attributable to the LIFO recapture amount. See the instructions for Form 1120, Schedule J, line 11. Line 9e. If property is produced or acquired for resale and the rules of section 263A apply to the corporation, cooperative, partnership, or other applicable entity, check the "Yes" box on line 9e. Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United States. Page You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax. You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103. 3 The time needed to complete and file this form will vary depending on individual circumstances. The estimated average time is: Recordkeeping . . . . 4 hr., 18 min. Learning about the law or the form . . . . 1 hr., 33 min. Preparing and sending the form to the IRS . . . . . . 2 hr., 53 min. If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. See the instructions for the tax return with which this form is filed. Form 8949 Department of the Treasury Internal Revenue Service Sales and Other Dispositions of Capital Assets a Information about Form 8949 and its separate instructions is at www.irs.gov/form8949. File with your Schedule D to list your transactions for lines 1b, 2, 3, 8b, 9, and 10 of Schedule D. OMB No. 1545-0074 2015 Attachment Sequence No. 12A Social security number or taxpayer identification number Name(s) shown on return Before you check Box A, B, or C below, see whether you received any Form(s) 1099-B or substitute statement(s) from your broker. A substitute statement will have the same information as Form 1099-B. Either will show whether your basis (usually your cost) was reported to the IRS by your broker and may even tell you which box to check. Part I Short-Term. Transactions involving capital assets you held 1 year or less are short term. For long-term transactions, see page 2. Note: You may aggregate all short-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS and for which no adjustments or codes are required. Enter the totals directly on Schedule D, line 1a; you aren't required to report these transactions on Form 8949 (see instructions). You must check Box A, B, or C below. Check only one box. If more than one box applies for your short-term transactions, complete a separate Form 8949, page 1, for each applicable box. If you have more short-term transactions than will fit on this page for one or more of the boxes, complete as many forms with the same box checked as you need. (A) Short-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS (see Note above) (B) Short-term transactions reported on Form(s) 1099-B showing basis was not reported to the IRS (C) Short-term transactions not reported to you on Form 1099-B 1 (a) Description of property (Example: 100 sh. XYZ Co.) (b) Date acquired (Mo., day, yr.) (c) Date sold or disposed of (Mo., day, yr.) (d) Proceeds (sales price) (see instructions) Adjustment, if any, to gain or loss. If you enter an amount in column (g), (e) (h) enter a code in column (f). Cost or other basis. Gain or (loss). See the separate instructions. See the Note below Subtract column (e) and see Column (e) from column (d) and (f) (g) in the separate combine the result Code(s) from instructions with column (g) Amount of instructions adjustment 2 Totals. Add the amounts in columns (d), (e), (g), and (h) (subtract negative amounts). Enter each total here and include on your Schedule D, line 1b (if Box A above is checked), line 2 (if Box B above is checked), or line 3 (if Box C above is checked) a Note: If you checked Box A above but the basis reported to the IRS was incorrect, enter in column (e) the basis as reported to the IRS, and enter an adjustment in column (g) to correct the basis. See Column (g) in the separate instructions for how to figure the amount of the adjustment. For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 37768Z Form 8949 (2015)