Viola Holloway and Renee Forrow are the sole equal partners in the general partnership of Holloway And Forrow Enterprises. The partnership, which is a retail office supplies and stationery store, began its operations on January 2, 1985. For Federal Income Tax purposes, the partnership is a calendar year taxpayer and uses the Accrual Method Of Accounting. Its Employer Identification Number is 76-1234567, address is 17302 East Meadow Bird Circle Houston, Texas 77086-1747, telephone number is (281) 437-6211, fax number is (281) 734-2116 and E-Mail address is "hollowayandforrowenterprises.com". The business activity code for the partnership is 453210. Both partners devote one hundred percent (100%) of their time to the business of the partnership and are equal partners of the partnership in every respect (ie. profit sharing ratio, loss sharing ratio, ownership, etc.). Viola Holloway, who is the designated Tax Matters Partner for the partnership, has social security number of 678-90-1234, her address is 1953 Beverly Lane Houston, Texas 77064-3218 and her telephone number is (832) 469-3614. Renee Forrow has social security number of 789-01-2345, her address is 1606 Natalie Court Houston, Texas 77089-4637 and her telephone number is (832) 948-3126. FINANCIAL INFORMATION During the year of 2021, the Holloway And Forrow Enterprises reported the following Income and Expenses (including necessary accruals) for Financial Accounting purposes: Gross Receipts Sales Returns And Allowances Purchases $1,482,000 109,000 510,000 Dividends Received From Stock (Not Qualified Dividends) Investments In Less Than twenty percent (20%) Owned United States (U.S.) Corporation 80,000 Interest Income: Taxable Interest 18,000 Tax-Exempt Interest 7,200 Guaranteed Payments: Viola Holloway 75,000 (Services) Renee Forrow 75,000 Salaries - Employees 108,000 Repairs And Maintenance 19,300 Rent Expense - Office 84,000 Rent Expense - Equipment 15,500 Payroll Taxes (Federal And State) 19,600 Interest Expense (Trade Or Business Interest) 25,200 Advertising Expense 33,500 Charitable Contributions ("60%" Charities) 48,000 Legal And Professional Fees 18,000 Depreciation Expense 50,000 * Utilities Expense 27,100 Employee's Health Insurance Premiums 14,200 Meals For Clients 5,000 Partners' Life Insurance Premiums 14,600 ** *. Based upon Straight-Line Depreciation, a useful life of five (5) years and no salvage value for all assets (see specific assets below). **Holloway And Forrow Enterprises Is The Designated Beneficiary. On January 1, 2021, the partner's Capital Accounts equaled $157,200 each. No additional capital contributions were made during the year of 2021 and each partner made a total of $140,000 (all cash) withdrawals throughout the course of the year of 2021. The Holloway And Forrow Enterprises owns the following depreciable assets: ASSET DESCRIPTION DATE ACQUIRED ORIGINAL COST Automobile - 2020 Lexus 460 April 1, 2020 $60,000 (Five-year Property) Automobile - 2020 Cadillac Seville April 1, 2020 60,000 (Five-year Property) Fumiture And Fixtures May 1, 2019 150,000 (Seven-year Property) Each automobile was used a total of 18,000 miles during the year of 2021 all which were business miles. The automobiles were not available for personal use during off-duty hours and were used solely by Viola Holloway and Renee Fornow, who both have another vehicle available for personal use. For Federal Income Tax purposes, all of these assets are depreciated using the Modified Accelerated Cost Recovery System (MACRS). Section 179 Deduction was not elected in regards to any of these assets nor was Straight-Line Depreciation used. BALANCE SHEETS The Balance Sheets (Financial Accounting) for the Holloway And Fonow Enterprises at the beginning and ending of the year of 2021 are as follows: ASSETS Cash January 1 December 31 $ 36,000 $ 84,000 Trade Notes And Accounts Receivable 86,000 90,000 Inventory (Valued At Cost)* 120,000 100,000 Marketable Securities-Long Term 130,000 230,000 Depreciable Assets (And Land) 280,000+ 280,000 ** Less: Accumulated Depreciation (65,000) (115,000) Other Assets (Deposits) 12,000 12,000 $599,000 $681,000 TOTAL ASSETS LIABILITIES AND PARTNERS' CAPITAL Accounts Payable (Non Recourse) Notes Payable - Short Term (Recourse) Notes Payable Long Term (Recourse) Partner's Capital (Total) TOTAL LIABILITIES AND PARTNERS CAPITAL $ 96,000 $ 94,400 24,600 24,000 164,000 212,000 314,400 350,600 $599,000 $ 681,000 -The rules of Section 263A of the Internal Revenue Code do not apply to the partnership. and OTHER INFORMATION Both partners are United States citizens (and individuals) and the partnership is not a partner in any other partnership. The partnership is not subject to the consolidated audit procedures of Sections 6221 through 6233 of the Internal Revenue Code and the partnership does not meet all three (3) requirements shown in the instructions (Schedule B) for Question 5. In addition, the partnership is not a publicly traded partnership as defined in Section 469(k)(2) of the Internal Revenue Code and the partnership has not filed nor is required to file Form 8264 - Application For Registration Of A Tax Shelter. During the year of 2021, Holloway And Forow Enterprises had no interest in or signature or other authority over any financial account in a foreign country. Furthermore, during the year of 2021, the partnership did not receive a distribution from nor was the partnership a grantor of or transferor to, a foreign trust. Finally, there were no distributions of property or transfer of a partnership interest during the year of 2021. REQUIRED Prepare the Partnership Return for the Holloway And Fonow Enterprises for the year of 2021 and Schedule K-1 for both partners. The following Forms are needed to complete the Return: Form 1065 Schedule B-1 (Form 1065) Form 1125-A Schedule K-1 (Form 1065) (2) Form 4562