The Dapper-Dons Partnership ,vas formed ten years ago as a general partnership to custom tailor men's clothing. Dapper-Dons is located at 123 Flamingo Drive in City, ST, 54321. Bob Dapper manages the business and has a 40o/o capital and profits interest. His address is 709 Brumby Way, City, ST, 54321. Jeremy Dons o,vns the remaining 60% interest but is not active in the business. His address is 807 Ninth Avenue, City, ST, 54321. The partnership values its inventory using the cost method and did not change the method used during the current yea r. The partnership uses the accrual method of accounting. The partnership has no foreign partners, no foreign transactions, no interests in foreign trusts, and no foreign financial accounts. This partnership is neither a tax shelter nor a publicly traded partnership. No changes in ownership of partnership interests occurred during the current year. The partnership made cash distributions of $155,050 and $232,576 to Dapper and Dons, respectively, on December 30 of the current yea r. It made no other property distributions. Financial statements for the current year are presented in Tables C:9-1 and C:9-2. Ignore the U.S. (domestic) production activities deduction. DapperDons, being an eligible small pass-through partnership, uses the small business simplified overall method for reporting these activities (see discussion for Line 13d of Schedules K and K-1 in the Form 1065 instructions). Prepare a current year (2017 for this problem) partnership tax return for Dapper-Dons Partnership.

Sales Returns and allowances Beginning inventory (FIFO method) Purchases Labor Supplies Other costs Goods available for sale Ending inventory' Gross profit Salaries for employees other than partners (W-2 wages) Guaranteed payment for Dapper Utilities expense Depreciation (MACRS depreciation is $74,311)' Automobile expense Office supplies expense Advertising expense Bad debt expense Interest expense (all trade or business-related) Rent expense Travel expense (meals cost $4,050 of this amount) Repairs and maintenance expense Accounting and legal expense Charitable contributionsd Payroll taxes Other taxes (all trade- or business-related) Total expenses Operating profit Other income and losses: Gain on sale of AB stock Loss on sale of CD stock1 Sec. 1231 gain on sale of land9 Interest on U.S. Treasury bills for entire year ($80,000 face amount) Dividends from 1 5%, -owned domestic corporation Net income $ 200,050 624,000 600,000 42,000 12,000 $1,478,050 (146,000) $51,000 85,000 46,428 49,782 12,085 4,420 85,000 2, 100 45,000 7,400 11,020 68,300 3,600 16,400 5, 180 1,400 $ 18,000 (26,075) 5,050 2,000 11,000 Additional Sec. 263A costs of $ 7 ,000 for the current year are included in other costs. $2,357,000 (20,000) $2,337,000 (1,332,050) $ 1,004,950 494, 11 5 $ 510,835 9,975 $ 520,810 b Ending inventory includes the appropriate Sec. 263A costs, and no further adjustment is needed to properly state cost of sales and inventories for tax purposes. ' The partnership reports a $10,000 positive AMT adjustment for property placed in service after 1986. Dapper-Oons acquired and placed in service $40,000 of rehabilitation expenditures for a certified historical property this year. The appropriate MAC RS depreciation on the rehabilitation expenditures already is included in the MACRS depreciation total. d The partnership made all contributions in cash to qualifying charities. The partnership purchased the AB stock as an investment two years ago on December 1 for $40,000 and sold it on June 14 of the current year for $58,000. ' The partnership purchased the CD stock as an investment on February 15 of the current year for $100,000 and sold it on August 1 for $73,925. 9 The partnership used the land as a parking lot for the business. The partnership purchased the land four years ago on March 17 for $30,000 and sold it on August 15 of the current year for $35,050.

Assets: Cash Accounts receivable Inventories Marketable securities Building and equipment Minus: Accumulated depreciation Land Total assets Liabilities and equities: Accounts payable Accrued salaries payable Payroll taxes payable Sales taxes payable Balance January 1 $ 10,000 72,600 200,050 220,000 374,600 (160,484) 185,000 $901, 766 $ 35,000 14,000 3,416 5,200 Balance December 31 $ 40,000 150,100 146,000 260,000 465,000 (173,100) 240,000 $1, 128,000 $ 46,000 18,000 7, 106 6,560 Mortgage and notes payable (current maturities) 44,000 52,000 Long-term debt 210,000 275,000 Capital: Dapper 236,060 289,334 Dons 354,090 434,000 Total liabilities and equities $901, 766 $1, 128,000

Instructions: Please use Form 1065 for 2018 and please include pictures of the completed form. Thanks!