In: Accounting
To complete this assignment, read the information below and then complete the 2017 partnership tax return (form 1065) including the K-1’s, and both individuals’ 2018 1040 by hand.
Scenario
Craft Beer Brewing Partnership
Revenues |
681,000 |
Office Rent |
28,000 |
COGS |
198,000 |
Salaries |
238,000 |
ST Gain on Sale of Stock |
100,000 |
LT Loss on Sale of Stock |
500,000 |
Contributions to Charities |
60,000 |
Investment Expenses |
6,000 |
Friends Dan and Lisa are each partners in the beer brewing partnership above.
Dan owns 3%
Lisa owns 6%
Additional Information about Dan (not including partnership info)
Married, 1 child
Wages from job = $18,000
Wages from wife’s job = $31,000
Additional Information about Lisa (not including partnership info)
Single, no children
Wages from job = 130,000
Sold stock held LT at a gain of 25,000
Paid state taxes of 8,900
Paid qualified mortgage interest of 10,000
Fill in the blanks:
1065, page 1
Line 1:
Line 3:
Line 8:
Line 21:
Line 22:
1065, page 4 (Schedule K)
Line 1:
Line 8:
Line 13a:
Line 13b:
Line 16b:
Line 18a:
Line 20b:
Dan’s Schedule K-1, Part III
Line 1:
Line 8:
Line 18a:
Lisa’s K-1
Line 1:
Line 13a:
Line 13k:
Line 20b:
Dan’s 1040
Line 1:
Line 2b:
Line 6:
Line 7:
Line 8:
Line 9:
Line 10:
Schedule 1, Line 17:
Lisa’s 1040
Line 6:
Line 7:
Line 8:
Line 9:
Line 10:
Schedule 1, Line 13:
1065, page 1
Line 1: 681000
Line 3: 48000
Line 8: 483000
Line 21: 266000
Line 22: 217000
1065, page 4 (Schedule K)
Line 1: 217000
Line 8: 100000
Line 13a: 60000
Line 13b: 0
Line 16b: 0
Line 18a: 0
Line 20b: 6000
Dan’s Schedule K-1, Part III
Line 1: 6510
Line 8: 3000
Line 18a: 0
Lisa’s K-1
Line 1: 13,020
Line 13a: 3600
Line 13k: 360
Line 20b: 360
Dan’s 1040
Line 7: 49000
Line 8a: 0
Line 17: 6510
Line 22: 52510
Line 37: 52510
Line 40: 12700
Line 42: 12150
Line 43: 27660
Lisa’s 1040
Line 13: 1000
Line 22: 144020
Line 38: 144020
Line 40: 22500
Line 42: 4050
Line 43: 117470
Other Questions
By how much does Dan’s AGI increase because of the partnership activities?
3510
Without partnership AGI = salaries of 49,000
Partnership activity adds share of ordinary income + share of capital gain/loss
= 217,000 * .03 = 6510 + 3000 (ST) and -15,000(LT) = -12,000, but only 3,000 loss allowed
=6510 – 3000 = 3510
By how much does Lisa’s taxable income decrease because of the partnership activities?
14580
= 217,000 * .06 = 13020 + 6000 (ST) and -30,000(LT) = -24,000 -> all of this loss can be used because she has a LT gain of 25,000 outside of the partnership.
=13020 – 24000 -3600 (contributions in itemized deductions)=-14,580