Prepare
: Form 1065 (with Schedule D, K, L, M-1, and M-2), Form 8949, and Form 4562
2. Partnership Return (55 points): Dominion, LLC is taxed as a partnership. 1. Prepare a Form 1065 for Dominion for tax year 2021. Recommended forms: Form 1065 (with Schedule D, K, L, M-1, and M-2), Form 8949, and Form 4562. Note: additional forms may be required, and forms listed here may not be needed. 2. Prepare a Schedule K-1 for Good Investor. Make sure to attach a statement to the K-1 with the required information that Good will need to compute their QBI deduction. A list of Dominion's revenues and expenses is presented below: Revenues Fees and commissions Taxable interest income from bank deposits Tax-exempt interest Net gain on stock sales Total revenues $4,800,000 1,600 3,200 4,000 $4,808,800 Expenses Advertising and public relations $ 380,000 Charitable contributions 28,000 Section 179 expense 20,000 Employee W-2 wages 1,000,000 Guaranteed payment (services), Ryan Ross, office manager 800,000 Guaranteed payment (services), other members 600,000 Business meals subject to 50% disallowance 200,000 Travel 320,000 Legal and accounting fees 132,000 Office rentals paid 80,000 Interest expense on operating line of credit 10,000 Insurance premiums 52,000 Office expense 200,000 Payroll taxes 92,000 Utilities 54,800 Total expenses $3,968,800 Selected Accounts from the LLC's balance sheet as of December 31 of this year is as follows: Cash Tax-exempt securities Marketable securities Leasehold improvements, furniture, and equipment Accumulated depreciation Total assets Beginning $ 444,000 120,000 436,000 960,000 (960,000) $1,000,000 Ending $ ? 120,000 300,000 980,000 (980,000) $ ? Additional Information: Good Investor owns a 35% partnership interest in Dominion. A purchase of $20,000 of office furniture will be deducted via a $179 deduction. (For simplicity, assume that Dominion uses the same cost recovery methods for both tax and financial purposes). There is no depreciation adjustment for alternative minimum tax purposes. Assume that this amount is separate from the 'Accumulated depreciation' account on the balance sheet. During the year, the LLC sold two securities. On June 15, Dominion purchased 1,000 shares of Tree, Inc. stock for $100,000; it sold those shares on December 15 for $80,000. On March 15 of last year, Dominion purchased 2,000 shares of FunBio, Inc. stock for $136,000; it sold those shares for $160,000 on December 15 of the current year. These transactions were reported to the IRS on Forms 1099-B; Dominion's basis in these shares was reported. Net income per books is $840,000. On January 1, the members' capital accounts equaled $200,000 each. No additional capital contributions were made this year. Each member withdrew $250,000 cash during the year. All contributions and distributions have been in cash, so the LLC has no net unrecognized 9704) gain or loss. The LLC's Federal ID number is 55-5555556. It uses the cash basis and the calendar year and began operations on January 1, 2007. All debt is shared equally by the members. Each member has personally guaranteed the debt of the LLC. On June 20th of the current year, Dominion borrowed $100,000 from Greedy Bank. All members are active in LLC operations. Assume the LLC is not considered a specified service trade or business, and Dominion's operations constitute one active trade or business for purposes of the passive activity and at-risk limitations. (Note that the $179 deduction is a business-related expense.) The LLC's UBIA (unadjusted basis immediately after acquisition) equals the total original cost of all leasehold improvements, or $980,000. The appropriate business code for the entity is 711410. For the Form 1065, page 5, Analysis of Net Income, put all partners allocations in cell 2(b)(ii), per IRS instructions for an LLC. Other than Good Investor, there are two other owners: Hard Worker with a 20% ownership, and Rich Investor that has a 45% ownership
