Ryan Wilder (111-11-1112), Oscar Churchill (222-22-2223), Clark Schick (333-33-3334), and Kim Howard (444-44-4445) are equal, active, and unrelated members in Wilder Accounting LLC (Wilder). Wilder is an accounting services for clients that help clients with business needs in the Irvine area. The LLCs Federal ID number is 55-5555556. It uses the cash basis and the calendar year and began operations on January 1, 2007. Its current address is 2501 El Prado,

Suite 2100, Irvine, CA 90210. The financial information enclosed from the LLCs income statement for the current year. Recently, Wilder has taken advantage of bonus depreciation and fully remodeled the premises and upgraded its leasehold improvements. This year, Wilder wrapped up its remodel with the purchase of $90,000 of office furniture for which it will claim a 168(k) (i.e., bonus depreciation) deduction. (For simplicity, assume that the Company uses the same cost recovery methods for both tax and financial purposes.) There is no depreciation adjustment for alternative minimum tax purposes. Wilder invests much of its excess cash in dividend-paying stocks and tax-exempt securities. During the year, the LLC several securities transactions. On June 15, purchased 1,000 shares of Fountain, Inc. stock for $100,000; it sold those shares on December 15 for $65,000. On March 15 of last year, Wilder purchased 2,000 shares of Fenway Machinery, Inc. stock for $189,000; it sold those shares for $199,500 on December 15 of the current year. These transactions were reported to the IRS on Forms 1099B; Wilders basis in these shares was reported. Each member received an equal guaranteed payment for services rendered. Also, Ryan Wilder loaned the partnership $3,000,000 in 2015. It is an interest only note due in 2026. The LLC issued Ryan a 1099 INT for the interest on the loan. Net income per books is $1,151,900. On January 1, the members capital accounts equaled $350,000 each. Additional capital contribution was made by Wilder noted above, and the other partners also contributed cash of $250,000 as a down payment to start construction of the new building in 2023. In addition to their guaranteed payments, each member withdrew $400,000

cash during the year. All contributions and distributions have been in cash before 2022. During 2022 Winder contributed Land with a basis of $100,000 and Fair Market Value of $250,000. This land will be used to build a new office building for the Company in 2023. The LLCs balance sheet as of December 31 of this year is also enclosed. Except for the Ryan Wilder loan, all debt is shared equally by the members. Each member has personally guaranteed the line of credit debt of the LLC. All members are active in LLC operations. For our purposes, assume that Wilders operations constitute one active trade or business for purposes of the passive activity and at-risk limitations. The appropriate business code for the entity is 541200. 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.

REQUIRED

1) Prepare a federal Form 1065, pages 1, 4, and 5, for Wilder Accounting LLC using tax basis information for Schedules L and M2. Use the Intuit Pro connect software provided to you in Canvas to prepare Form 1065 Forms 4562, 8949, and Schedule D and any other forms you think are necessary. DO NOT PREPARE THE STATE TAX RETURNS

2) Prepare Schedule K1 for all LLC members. Use any address for the partners.

3) You need to prepare an explanation write up on how you treated the items is the facts above. The explanation is meant to determine if you understand the 1065 assignment. Please explain how you determined what is taxable, not taxable, deductible, or not deductible. Use the appropriate authorities to document your conclusions. Also, provide detail computations of your book/tax differences and computation of taxable income. Finally, please provide a computation each partners tax basis (assume the beginning capital account is the opening tax basis) and document the tax consequences of all transactions between the members and LLC. If the facts aren't in the case, please make your own assumptions and document them. Prepare this is in a tax memorandum format and it should be single-spaced.

______________________________________

Wilder Accounting LLC

Financial Statements-Cash Basis

12/31/2022

Consulting Revenues 20,000,000

Interest Income Wells Fargo 50,000

Interest from City of Newport Beach Bonds 65,200

Net Loss from Sale of Stock (24,500)

Qualified Dividends 42,500

Total Revenue 20,133,200

Guaranteed Payments 12,000,000

W-2 Wages 3,500,000

Advertising 550,000

Charitable Contributions 96,000

Depreciation 90,000

Repairs and Maintenance 150,000

Premiums for Life Insurance for Partners 75,000

Interest Expense-Line of Credit 50,000

Interest Expense- Loan Wilder** 100,000

Legal and Accounting Fees* 132,000

Meals (non restaurant) 260,000

Meals (restaurant) 150,000

Internet 25,000

Travel 300,000

Entertainment 600,000

Insurance 52,000

Office Rent 175,000

Office Expense 272,000

Payroll Taxes 300,000

Utilities 54,300

Political Contributions 50,000

Total Expenses 18,981,300

Book Income 1,151,900

* Includes $50,000 of Legal Fees from a failed acquisition of an insurance company

** 1099 was issued to Mr. Wang

12/31/2021 12/31/2022

Cash 4,900,000 4,451,900

Marketable Securities 500,000 1,250,000

Land - 250,000

Office Equipment 960,000 1,050,000

Accumulated Depreciation (960,000) (1,050,000)

Total Assets 5,400,000 5,951,900

12/31/2021 12/31/2022

Line of Credit 1,000,000 1,000,000

Loan from Wilder 3,000,000 3,000,000

Capital Account-Wilder 350,000 487,975

Capital Account-Chuchhill 350,000 487,975

Capital Account-Schick 350,000 487,975

Capital Account-Howard 350,000 487,975

Total Liabilities and Equity 5,400,000 5,951,90