Question

In: Accounting

To complete this assignment, read the information below and then complete the 2017 partnership tax return...

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:

Solutions

Expert Solution

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


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