Required Information Comprehensive Problem 22-88 (Algo) (LO 22-1, LO 22-2, LO 22-3, LO 22-4, LO 22-5, LO 22-6) While James Craig and his former classmate Paul Dolltle both studied accounting at school, they ended up pursuing careers in professional cake decorating. Their company. Good to Eat (GTE), specializes in custom-sculpted cakes for weddings, birthdays, and other celebrations. James and Paul formed the business at the beginning of 2021, and each contributed $280.000 in exchange for a 50 percent ownership Interest GTE also borrowed $1,120.000 from a local bank. Both James and Paul had to personally guarantee the loan. Both owners provide significant services for the business. The following Information pertains to GTE's 2021 activities: GTE uses the cash method of accounting (for both book and tax purposes) and reports Income on a calendar-year basis. GTE received $1.600.000 of sales revenue and reported $750.000 of cost of goods sold (It did not have any ending Inventory). GTE paid $145.000 compensation to James. $145,000 compensation to Paul, and $155.000 of compensation to other employees (assume these amounts Include applicable payroll taxes, if any). GTE Pald $38.000 of rent for a building and equipment. $43.000 for advertising. $78,400 in Interest expense. $6,300 for utilities, and $4,300 for supplies. GTE contributed $16,500 to charity GTE recelved a $5.600 qualified dividend from a great stock Investment (It owned 2 percent of the corporation distributing the dividend), and it recognized $3.800 in short-term capital gain when it sold some of the stock. On December 1, 2021. GTE distributed $43,000 to James and $43,000 to Paul. GTE has qualified property of $323.000 (unadjusted basis). (Leave no answer blank. Enter zero if applicable. Enter N/A if not applicable.) Comprehensive Problem 22-86 (Algo) Part 5-1 b-1. Assume James and Paul formed GTE as an LLC. Employer identification number: 58-1111111 Complete GTE's Form 1065. page 1. Form 1065. Schedule K. Use 2021 tax rules regardless of year on tax form. Form 1065 Page 1. Form 1065 Department of the Treasury Internal Revenue Service A Principal business activity U.S. Return of Partnership Income For calendar year 2020, or tax year beginning 2020.anding Go to www.is.gov/Fam 1065 for instructions and the latest information, Name of partnership 20 OMB No 1545-0123 2020 D Employer identification number B Principal product or service Number, street and room or suite no. If a P.O. bax, see instructions. E Date business started Type or Print C Business code number City or town, state or province, country, and ZIP or foreign postal code Total assets Instructions) G Check applicable boxes: (1) Initial Rotum (2) Final Roburn (3) Nama Changa (4) Address Change (5) Amended Retum H Check accounting method: (2) Accu (3) Other specity 5 10 11 15 1 Number of Schedules K-1. Attach one for each person who was a partner at any time during the tax year. Check it Schedules and M-3 are attached K Check if partnership: (1) Aggregated activities for section 465 at-risk purposes (2) Grouped activities for section 469 pezsive activity purposes Caution: Include only trade or business income and expenses on lines 1a through 22 below. See instructions for more information. 1a Gross receipts ar sales 10 Rotums and allowances 10 | Balance Subtract line 1b from line la 10 12 Cost of goods sold (attach Form 1125-A) Income | 3 Gross profit Subtract line 2 from ine 10 14 Ordinary income (los) from other partnerships, estates, and trusts (attach statement) 4 5 Not farm profit os) attach Schedule F (Form 1040) 6 Net gain floss) from Fam 4797, Part II, line 17 (attach Form 4797) 6 7 Other income (loss) (attach statement) 8 Total income (loss). Combina Ines through Salaries and wages (other than to partners) (oss employment credits 10 Guaranteed payments to partners 11 Repairs and maintenance 12 Bad debts 12 13 Rant 13 Deductions 14 Taxes and licenses 14 (see 15 Interest (see Instructions instructions 162 Depreciation (if required, attach Form 4562) 165 for Less depreciation reported on Form 1125-A and elsewhere an robum 160 160 limitations) 17 Deplotion (Do not deduct oil and gas depletion.) 17 18 Retirement plans, at 18 19 Employee benefit programs 19 20 Other deductions (attach statement) 20 21 Total deductions. Add the amounts shown in the far right column for lines 9 through 20 21 22 Ordinary business income foss). Subtract line 21 from line 8 22 23 Interest due under the look back method-completed long-term contracts (attach Farm 3597) 23 24 Interest due under the look back method-income forecast method (attach Form 8866) 24 25 BBA AAR imputed underpayment (see instructions) 25 Tax and 26 Other taxes (sce instructions) 26 Payment 27 Total balance due. Add lines 23 through 26 27 28 Payment (sce instructions) 28 29 Amount owed. If line 28 is smaller than line 27. enter amount owed 29 30 Overpayment line 28 is larger than line 27. enter avarpayment Under penalties of perjury, I declare that I have examined this retum, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparar (other than partner or limited liability company members is based on al information of which preparer has any knowledge Sign May the IRS discuss this return with the Here preparar shown below? so instructions Signature of partner or limited ability company member Date Yes No Print Type preparer's name Preparer's signature Data Check it allemployed PTIN Paid Preparer Firm's name Firm's EIN Use Only Firm's address For Paperwork Reduction Act Notice, Gee caparate Instruction Cat No. 11390Z Form 1085 (2020) THIS FORM IBA SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX 30 Phone na Required Information Comprehensive Problem 22-88 (Algo) (LO 22-1, LO 22-2, LO 22-3, LO 22-4, LO 22-5, LO 22-6) While James Craig and his former classmate Paul Dolltle both studied accounting at school, they ended up pursuing careers in professional cake decorating. Their company. Good to Eat (GTE), specializes in custom-sculpted cakes for weddings, birthdays, and other celebrations. James and Paul formed the business at the beginning of 2021, and each contributed $280.000 in exchange for a 50 percent ownership Interest GTE also borrowed $1,120.000 from a local bank. Both James and Paul had to personally guarantee the loan. Both owners provide significant services for the business. The following Information pertains to GTE's 2021 activities: GTE uses the cash method of accounting (for both book and tax purposes) and reports Income on a calendar-year basis. GTE received $1.600.000 of sales revenue and reported $750.000 of cost of goods sold (It did not have any ending Inventory). GTE paid $145.000 compensation to James. $145,000 compensation to Paul, and $155.000 of compensation to other employees (assume these amounts Include applicable payroll taxes, if any). GTE Pald $38.000 of rent for a building and equipment. $43.000 for advertising. $78,400 in Interest expense. $6,300 for utilities, and $4,300 for supplies. GTE contributed $16,500 to charity GTE recelved a $5.600 qualified dividend from a great stock Investment (It owned 2 percent of the corporation distributing the dividend), and it recognized $3.800 in short-term capital gain when it sold some of the stock. On December 1, 2021. GTE distributed $43,000 to James and $43,000 to Paul. GTE has qualified property of $323.000 (unadjusted basis). (Leave no answer blank. Enter zero if applicable. Enter N/A if not applicable.) Comprehensive Problem 22-86 (Algo) Part 5-1 b-1. Assume James and Paul formed GTE as an LLC. Employer identification number: 58-1111111 Complete GTE's Form 1065. page 1. Form 1065. Schedule K. Use 2021 tax rules regardless of year on tax form. Form 1065 Page 1. Form 1065 Department of the Treasury Internal Revenue Service A Principal business activity U.S. Return of Partnership Income For calendar year 2020, or tax year beginning 2020.anding Go to www.is.gov/Fam 1065 for instructions and the latest information, Name of partnership 20 OMB No 1545-0123 2020 D Employer identification number B Principal product or service Number, street and room or suite no. If a P.O. bax, see instructions. E Date business started Type or Print C Business code number City or town, state or province, country, and ZIP or foreign postal code Total assets Instructions) G Check applicable boxes: (1) Initial Rotum (2) Final Roburn (3) Nama Changa (4) Address Change (5) Amended Retum H Check accounting method: (2) Accu (3) Other specity 5 10 11 15 1 Number of Schedules K-1. Attach one for each person who was a partner at any time during the tax year. Check it Schedules and M-3 are attached K Check if partnership: (1) Aggregated activities for section 465 at-risk purposes (2) Grouped activities for section 469 pezsive activity purposes Caution: Include only trade or business income and expenses on lines 1a through 22 below. See instructions for more information. 1a Gross receipts ar sales 10 Rotums and allowances 10 | Balance Subtract line 1b from line la 10 12 Cost of goods sold (attach Form 1125-A) Income | 3 Gross profit Subtract line 2 from ine 10 14 Ordinary income (los) from other partnerships, estates, and trusts (attach statement) 4 5 Not farm profit os) attach Schedule F (Form 1040) 6 Net gain floss) from Fam 4797, Part II, line 17 (attach Form 4797) 6 7 Other income (loss) (attach statement) 8 Total income (loss). Combina Ines through Salaries and wages (other than to partners) (oss employment credits 10 Guaranteed payments to partners 11 Repairs and maintenance 12 Bad debts 12 13 Rant 13 Deductions 14 Taxes and licenses 14 (see 15 Interest (see Instructions instructions 162 Depreciation (if required, attach Form 4562) 165 for Less depreciation reported on Form 1125-A and elsewhere an robum 160 160 limitations) 17 Deplotion (Do not deduct oil and gas depletion.) 17 18 Retirement plans, at 18 19 Employee benefit programs 19 20 Other deductions (attach statement) 20 21 Total deductions. Add the amounts shown in the far right column for lines 9 through 20 21 22 Ordinary business income foss). Subtract line 21 from line 8 22 23 Interest due under the look back method-completed long-term contracts (attach Farm 3597) 23 24 Interest due under the look back method-income forecast method (attach Form 8866) 24 25 BBA AAR imputed underpayment (see instructions) 25 Tax and 26 Other taxes (sce instructions) 26 Payment 27 Total balance due. Add lines 23 through 26 27 28 Payment (sce instructions) 28 29 Amount owed. If line 28 is smaller than line 27. enter amount owed 29 30 Overpayment line 28 is larger than line 27. enter avarpayment Under penalties of perjury, I declare that I have examined this retum, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparar (other than partner or limited liability company members is based on al information of which preparer has any knowledge Sign May the IRS discuss this return with the Here preparar shown below? so instructions Signature of partner or limited ability company member Date Yes No Print Type preparer's name Preparer's signature Data Check it allemployed PTIN Paid Preparer Firm's name Firm's EIN Use Only Firm's address For Paperwork Reduction Act Notice, Gee caparate Instruction Cat No. 11390Z Form 1085 (2020) THIS FORM IBA SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX 30 Phone na