Q1:
What is Kelsey's distributive share of qualified business income (QBI) from the partnership that may be used to figure her QBI deduction when she files her individual Form 1040?
(Note: Due to rounding, amounts presented in the answer choices may not precisely match the amounts generated in every BlockWorks return. Differences of $1 are not uncommon.)
$30,000
$32,257
$60,000
$64,515
IF I MAY TO POST 2 QUESTIONS DUE TO PICTURE UPLOAD EACH QUESTION IS TOO LONG, THX
Q2) What is the balance of the partners' capital accounts at the end of the year, as reported on Schedule M-2 of the Form 1065?
(Note: Due to rounding, amounts presented in the answer choices may not precisely match the amounts generated in every BlockWorks return. Differences of $1 are not uncommon.)
$1,800
$6,315
$64,515
$66,315
PLEASE STATE THE CHOICE TO AVOID CONFUSTION, THX
introduction K and Z Cleaning is a partnership in which the two general partners, Kelsey Taylor and Zuri Mitchell, operate a business. They provide cleaning services to small businesses in their area. The data required for the "General Information" screen has been pre-entered for you, but you will need to refer to the information shown below to complete the return. The business opened January 4, 2022, and their tax year ended on December 31, 2022. Zuri is the partnership representative. Entity Information Entity name: K and Z Cleaning Address: 2301 Sagamore Drive Your City, YS XXXXX EIN: 07-0000801 Entity type: Domestic general partnership Method of accounting: Cash Business activity: Janitorial Services Business code: 561720 Date business started: January 4, 2022 Contact Information Officer: Zuri Mitchell Title: Co-owner SSN: 415-00-0803 Partnership phone number: (XXX) 555-0801 Email: Twomomsjanitorial@net.net Authorize IRS to discuss with Yes preparer: Partner Information Partner name: Zuri Mitchell Partner SSN: 415-00-0803 Partner DOB: June 17, 1988 Address: 2301 Sagamore Drive Your City, YS XXXXX Profit percentage: 50% General partner, subject to selfemployment tax Partner name: Kelsey Taylor Partner SSN: 415-00-0804 Partner DOB December 12, 1987 Address: 2319 Sagamore Drive Profit percentage: 50% General partner, subject to selfemployment tax Zuri and Kelsey are friends and neighbors who decided to start a small business. They wanted to earn extra income, and a primary goal for each of them was to work in a business that would give them the freedom to set their own hours. They determined that there was a demand for commercial cleaning services in their area, and they liked the idea that this type of business offered revenue potential without requiring a large, up-front investment. Zuri and Kelsey agreed to form a partnership and split all the profits equally, and to assume equal responsibility for all liabilities. They agreed that there would be no guaranteed payments. At the time of formation, Kelsey contributed $900 in cash in exchange for her 50% profitsharing interest. Zuri also contributed $900 in cash in exchange for her 50% profit-sharing interest. They worked together to create a business page on a social networking site, and they each spent time networking and gaining clients prior to the formation of the partnership. Zuri performs ongoing, basic bookkeeping services for the business. The business uses The partnership does not have any international activities. Zuri and Kelsey have each signed statements (which they timely provided) saying they do not require a Schedule K-3, nor will they file Form 1116, Foreign Tax Credit, with their 2022 individual income tax return. Income and Expenses In 2022, the sales revenue for the services provided by the partnership totaled $68,000. Kelsey and Zuri performed all the cleaning services themselves. They did not have any employees. No payments were made to independent contractors or vendors that required them to file a Form 1099. Detailed information about their expenses is provided in the income statement shown below. Distributions During the year, the partnership made total cash distributions of $60,000, with each partner receiving a cash distribution of $30,000. Financial Statements Zuri prepared the partnership's income statement and balance sheet for the year ending December 31, 2022. No assets were placed in service during the year. The income statement and balance sheet for this business are shown below. \begin{tabular}{|lr|} \hline \multicolumn{2}{|c|}{\( \begin{array}{r}\text { K and Z Cleaning } \\ \multicolumn{1}{|c|}{\text { Balance Sheet for Year Ending December 31, }} \\ \hline\end{array} \)} \\ \hline Assets \\ Cash and cash equivalents & \\ Total Assets & $6,315 \\ & $6,315 \\ Liabilities and Partners' Equity & \\ Accounts payable & $0 \\ Long-term debt & $0 \\ Total Liabilities & $6,315 \\ Partners' Equity & $6,315 \\ Partners' capital accounts & $6,315 \\ Total Partners' Equity & $6,315 \\ Total Liabilities and Partners' Equity & \\ \hline \end{tabular} introduction K and Z Cleaning is a partnership in which the two general partners, Kelsey Taylor and Zuri Mitchell, operate a business. They provide cleaning services to small businesses in their area. The data required for the "General Information" screen has been pre-entered for you, but you will need to refer to the information shown below to complete the return. The business opened January 4, 2022, and their tax year ended on December 31, 2022. Zuri is the partnership representative. Entity Information Entity name: K and Z Cleaning Address: 2301 Sagamore Drive Your City, YS XXXXX EIN: 07-0000801 Entity type: Domestic general partnership Method of accounting: Cash Business activity: Janitorial Services Business code: 561720 Date business started: January 4, 2022 Contact Information Officer: Zuri Mitchell Title: Co-owner SSN: 415-00-0803 Partnership phone number: (XXX) 555-0801 Email: Twomomsjanitorial@net.net Authorize IRS to discuss with Yes preparer: Partner Information Partner name: Zuri Mitchell Partner SSN: 415-00-0803 Partner DOB: June 17, 1988 Address: 2301 Sagamore Drive Your City, YS XXXXX Profit percentage: 50% General partner, subject to selfemployment tax Partner name: Kelsey Taylor Partner SSN: 415-00-0804 Partner DOB December 12, 1987 Address: 2319 Sagamore Drive Profit percentage: 50% General partner, subject to selfemployment tax Zuri and Kelsey are friends and neighbors who decided to start a small business. They wanted to earn extra income, and a primary goal for each of them was to work in a business that would give them the freedom to set their own hours. They determined that there was a demand for commercial cleaning services in their area, and they liked the idea that this type of business offered revenue potential without requiring a large, up-front investment. Zuri and Kelsey agreed to form a partnership and split all the profits equally, and to assume equal responsibility for all liabilities. They agreed that there would be no guaranteed payments. At the time of formation, Kelsey contributed $900 in cash in exchange for her 50% profitsharing interest. Zuri also contributed $900 in cash in exchange for her 50% profit-sharing interest. They worked together to create a business page on a social networking site, and they each spent time networking and gaining clients prior to the formation of the partnership. Zuri performs ongoing, basic bookkeeping services for the business. The business uses The partnership does not have any international activities. Zuri and Kelsey have each signed statements (which they timely provided) saying they do not require a Schedule K-3, nor will they file Form 1116, Foreign Tax Credit, with their 2022 individual income tax return. Income and Expenses In 2022, the sales revenue for the services provided by the partnership totaled $68,000. Kelsey and Zuri performed all the cleaning services themselves. They did not have any employees. No payments were made to independent contractors or vendors that required them to file a Form 1099. Detailed information about their expenses is provided in the income statement shown below. Distributions During the year, the partnership made total cash distributions of $60,000, with each partner receiving a cash distribution of $30,000. Financial Statements Zuri prepared the partnership's income statement and balance sheet for the year ending December 31, 2022. No assets were placed in service during the year. The income statement and balance sheet for this business are shown below. \begin{tabular}{|lr|} \hline \multicolumn{2}{|c|}{\( \begin{array}{r}\text { K and Z Cleaning } \\ \multicolumn{1}{|c|}{\text { Balance Sheet for Year Ending December 31, }} \\ \hline\end{array} \)} \\ \hline Assets \\ Cash and cash equivalents & \\ Total Assets & $6,315 \\ & $6,315 \\ Liabilities and Partners' Equity & \\ Accounts payable & $0 \\ Long-term debt & $0 \\ Total Liabilities & $6,315 \\ Partners' Equity & $6,315 \\ Partners' capital accounts & $6,315 \\ Total Partners' Equity & $6,315 \\ Total Liabilities and Partners' Equity & \\ \hline \end{tabular}
