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 Schedule K. Page 4 Total amount 30 Ah 40 55 9a 95 90 10 121 Amount 12) Amount Form 1065 (2020 Schedule K Partners' Distributive Share Items Ordinary business income loss) (page 1. line 22) 2 Not rental real estate income foss) (attach Form 8825) 3. Other gross rental income (los) Expenses from other rental activities (attach statement) c Othernet rental income (loss). Subtract line ab from line 32 | 4 Guaranteed payments: Services b Capital Total. Add lines 4a and 4b 5 Interest income Income (Loss) 6 Dividends and dividend equivalents: Ordinary dividends Oualified dividends c Dividend equivalents 17 Royalties 18 Net short-term capital gain loss) (attach Schedule D (Form 10651) 9a Not long-term capital gain (loss) (attach Schedule D Form 1065) b Collectibles (289)gain loss c Unrecaptured section 1250 gain (attach statement) 10 Net section 1231 gain loss) (attach For 4797) 11 Other income (loss) (so instructions) Type 12 Section 179 deduction (attach Form 4562] 13a Contributions Deductions Investment interest expense C Section (X2) expenditures 11) Type d Other deductions (see instructions) Type 14a Net camings (loss) from self-employment Self-Employment Gross farming or fishing income cGrass nonfarm income 15a Low-income housing credit (Section 42015) Low-income housing credit (other) Credits cualified rehabilitation expenditures (rental real estate) (attach For 3468, applicable) d Other rental real estate credits (see instructions) Type Other rental credits (instructions) Type - + Other credits (see instructions Type 16a Name of country or U.S. possession Gross income from all sources cGrass income sourced at partner level Foreign gross income sourced at partnership level d Reserved for future use e Foreign branch category Passive category 9 General Category Foreign Deductions allocated and apportioned at partner level Transactions Interest expense Deductions allocated and apportioned at partnership level to foreign source income k Reserved for future use Foreign branch category m Passive category n General Category P Total foreign taxes (check one): 19 Reduction in taxes available for credit (attach statement Other foreign tax information (attach statement) 17a Post-1986 depreciation adjustment Alternative b Adjusted gain or loss Minimum Tax c Deplotion (other than oil and gas) (AMT) Items d Oi, gas, and geothermal properties-gross income Oi, gas, and geothermal properties deductions + Other AMT items (attach statement 1 Ba Tax-exempt interest income Other tax-exempt income c Nondeductible expenses Other 19a Distributions of cash and marketable securities Information b Distributions of other property 20a Investment income In th+###* 11 12 13a 130 1302) 130 14a 145 140 15a 150 150 150 150 151 165 160 h Other (attach statement) 151 Other 16h Other (attach statement) Accrued 161 16m 17a 175 170 17d 170 171 18a 185 180 19a 195 20a 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 Schedule K. Page 4 Total amount 30 Ah 40 55 9a 95 90 10 121 Amount 12) Amount Form 1065 (2020 Schedule K Partners' Distributive Share Items Ordinary business income loss) (page 1. line 22) 2 Not rental real estate income foss) (attach Form 8825) 3. Other gross rental income (los) Expenses from other rental activities (attach statement) c Othernet rental income (loss). Subtract line ab from line 32 | 4 Guaranteed payments: Services b Capital Total. Add lines 4a and 4b 5 Interest income Income (Loss) 6 Dividends and dividend equivalents: Ordinary dividends Oualified dividends c Dividend equivalents 17 Royalties 18 Net short-term capital gain loss) (attach Schedule D (Form 10651) 9a Not long-term capital gain (loss) (attach Schedule D Form 1065) b Collectibles (289)gain loss c Unrecaptured section 1250 gain (attach statement) 10 Net section 1231 gain loss) (attach For 4797) 11 Other income (loss) (so instructions) Type 12 Section 179 deduction (attach Form 4562] 13a Contributions Deductions Investment interest expense C Section (X2) expenditures 11) Type d Other deductions (see instructions) Type 14a Net camings (loss) from self-employment Self-Employment Gross farming or fishing income cGrass nonfarm income 15a Low-income housing credit (Section 42015) Low-income housing credit (other) Credits cualified rehabilitation expenditures (rental real estate) (attach For 3468, applicable) d Other rental real estate credits (see instructions) Type Other rental credits (instructions) Type - + Other credits (see instructions Type 16a Name of country or U.S. possession Gross income from all sources cGrass income sourced at partner level Foreign gross income sourced at partnership level d Reserved for future use e Foreign branch category Passive category 9 General Category Foreign Deductions allocated and apportioned at partner level Transactions Interest expense Deductions allocated and apportioned at partnership level to foreign source income k Reserved for future use Foreign branch category m Passive category n General Category P Total foreign taxes (check one): 19 Reduction in taxes available for credit (attach statement Other foreign tax information (attach statement) 17a Post-1986 depreciation adjustment Alternative b Adjusted gain or loss Minimum Tax c Deplotion (other than oil and gas) (AMT) Items d Oi, gas, and geothermal properties-gross income Oi, gas, and geothermal properties deductions + Other AMT items (attach statement 1 Ba Tax-exempt interest income Other tax-exempt income c Nondeductible expenses Other 19a Distributions of cash and marketable securities Information b Distributions of other property 20a Investment income In th+###* 11 12 13a 130 1302) 130 14a 145 140 15a 150 150 150 150 151 165 160 h Other (attach statement) 151 Other 16h Other (attach statement) Accrued 161 16m 17a 175 170 17d 170 171 18a 185 180 19a 195 20a
