Business Finance
TAX 4011 Florida International University Prima Donna Partnership Discussion

TAX 4011

Florida International University

TAX

Question Description

I’m studying for my Accounting class and need an explanation.

I need to complete this assignment with all tax return forms. This is a partnership return and is required by March 31st. Can you guys do it for me ?

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PRIMA DONNA PARTNERSHIP Due Date: Wednesday April 1, 2020 at 11:59 pm Purpose: The purpose of this is not merely to learn how to fill-in forms but to enable you to meet the following goals: • Understand the compliance requirements of partnerships • Identify common book-tax differences and distinguish between permanent & temporary differences. • Identify the elements that are included in Ordinary Business Income and distinguish them from separately stated items. Task: In order to successfully complete this assignment you must: • • • • Complete Prima Donna Partnership Form 1065 and all related schedules. Be sure to attach schedules for any line item, which indicates one is required on the 1065. This includes line items that may require you to create a schedule that identifies the various items that are included in a line on the return these usually indicate “attach schedule.” Other lines will indicate specifically which schedule must be included with the return. The returns must be in.pdf format. The student can use either: o Forms schedules and instructions found at www.irs.gov o Tax preparation software may be used to prepare your assignment, but submission must still be in .pdf format. Include a list of all the judgments, decisions and assumptions that you made in order to complete the return. This should be submitted along with your return. FORM 4562 is not required. (Do not complete Form 4562 [depreciation calculation] since you do not have all the information). PRIMA DONNA PARTNERSHIP Criteria for Success: In order to earn maximum credit for this assignment be sure to review the grading rubric. Performance Statement: Prepare a partnership tax return. Fair Quality (25 pt.) Dimension/Task Your return meets ANY of these criteria: • Content- Book to Tax Differences – 30% • Key items requiring special tax treatment were not identified. Ordinary business is completely incorrect Your return meets ANY of these criteria: Content – Separately state Items -20 • • Key items were not identified. K-1’s for all partners are incorrect Your return meets ANY of these criteria: Content- Balance Sheet – 30% • Key items requiring special tax treatment were not identified. • Capital Accounts are all incorrect Your return meets ANY of these criteria: Completeness-20% • Many schedules or forms are missing • Many schedules or forms are incomplete Average Quality (40 pts.) Your return meets ANY of these criteria: • A key item requiring special tax treatment was not identified. • Discrepancy between income amounts and reconciliations Your return meets ANY of these criteria: • • A key item requiring treatment was not identified. K-1 for one partner is incorrect Your return meets ANY of these criteria: • A key items requiring special tax treatment was not identified. • Capital account for contribution of property is incorrect Your return meets ANY of these criteria: • A schedules or form(s) are missing • A schedule(s) or form(s) is incomplete Excellent (50 pts.) Your return includes ALL of the following criteria: • • Key items requiring special tax treatment were all identified. Ordinary Business income is correct Your return includes ALL of the following criteria: • • Key items requiring treatment were all identified. All partner K-1s are correct Your return includes ALL of the following criteria: • Key items requiring special tax treatment were all identified. • Capital Accounts are all correct Your return includes ALL of the following criteria: • Necessary schedules and forms are provided. • Schedules and forms are complete. 2 PRIMA DONNA PARTNERSHIP General Information The Prima Donna Partnership (FEI 92-4765432) was formed ten years ago as a general partnership to custom tailor women’s clothing. Prima Donna is located at 123 Flamingo Drive in Haines City, MO 54321. Mariana Prima manages the business and has a 45% capital and profits interest. Her address is 709 Brumby Way, Haines City, MO 54321 and SS# 231-45-9776. Donna Hart owns the remaining 55% interest but is not active in the business. Her address is 807 Ninth Avenue Haines City, MO 54321 and SS# 567-54-4221. The partnership values its business using the cost method and did not change the method used during the current year. The partnership uses the accrual method of accounting. Because of its simplicity the partnership is not subject to partnership audit procedures. The partnership has no foreign partners, no foreign transactions, no interest in foreign trusts, and no foreign bank accounts. This partnership is neither a tax shelter nor a publicly traded partnership. No changes in ownership of partnership interest occurred during the current year. The partnership made cash distributions of $270,000 and $330,000 to Prima and Hart, respectively, on December 30, 2019. It made no other cash or property distributions during the year. Assume that the business qualifies as qualified business income. Assume that the return is not late. See the financial statements for the period that follow. Required: Prepare a 2019 partnership return including all required schedules. 3 PRIMA DONNA PARTNERSHIP Income Statement for the 12 months ended December 31, 2019 Sales $2,850,000 Returns and allowances -27,000 $2,823,000 Beginning Inventory (FIFO method) $192,000 Purchases 728,000 Labor 654,000 Supplies 71,000 Other costs [1] 12,000 Goods Available for Sale Ending Inventory [2] $1,657,000 -247,000 Gross Profit Salaries for employees $1,413,000 132,000 Guaranteed payment for Prima 80,000 Utilities Expense 45,800 Depreciation (MACRS is $92,270) [3] 52,900 Automobile Expense 21,500 Office Supplies Expense 8,300 Advertising expense 78,000 Bad Debt Expense 24,000 Interest Expense [4] 25,000 Rent Expense 14,600 Travel Expense [5] 10,800 Repairs and Maintenance 63,800 Accounting and Legal Expense 1,410,000 8,500 Charitable Contributions [6] 15,800 Payroll Taxes 12,200 Other Taxes 11,600 Total Expense 604,800 Operating Profits $808,200 Other Income and losses: Gain (Loss) on sale of AB stock [7] -12,000 Gain (Loss) on sale of CD stock [8] 3,000 Sec. 1231 gain(loss) on sale of land [9] Interest on US Treasury bills [10] Dividends from 15% owned domestic corporation Net Income 25,000 1,500 10,000 27,500 $835,700 4 PRIMA DONNA PARTNERSHIP Income Statement for the 12 months ended December 31, 2019 Income Statement Footnotes: [1] Additional Sec 263A costs of 6,000 for the current year are included in other costs. [2] Ending inventory includes the appropriate Sec. 263A costs and no further adjustment is needed for tax purposes. [3] The partnership reports a $9,000 positive AMT adjustment for property placed in service after 1986. They acquired and placed in service $25,000 of rehabilitation expenditures for certified historical property this year. The appropriate MACRS depreciation on this is included in the MACRS amount indicated above. [4] All trade or business related [5] Meals of $8,000 are included in the travel expense. [6] The partnership made all contributions in cash to qualifying charities. [7] The partnership purchased the AB stock as an investment earlier this year on February 1 for $30,000 and sold it on June 14. [8] The partnership purchased the CD stock as an investment on February 15 of the current year for $90,000 and sold it on August 1 of the current year. [9] The partnership used unimproved land across the street as a parking lot for the business. The partnership purchased the land four years ago on March 17 for $25,000 and sold it on August of this year. [10] Based on $80,000 face amount 5 PRIMA DONNA PARTNERSHIP Balance Sheet for January 1 and December 31 of the Current Year Balance January 1 Assets: Cash Accounts Receivable Inventories Marketable Securities [1] Building & Equipment Accumulated Depreciation Land Total Assets Liabilities & Equities: Accounts Payable Accrued Salaries Payable Payroll Taxes Payable Sales Tax Payable Current Mortgage and Note Payable Long-term Debt Capital: Prima Hart Total Liabilities and Equities Balance December 31 $156,010 191,000 192,000 110,000 484,000 -272,740 175,000 $1,035,270 $277,100 232,000 247,000 110,000 524,000 -325,640 150,000 $1,214,460 $26,000 18,000 4,109 7,600 $15,000 19,000 4,799 2,400 42,000 42,000 223,000 181,000 321,552 393,009 427,617 522,644 $1,035,270 $1,214,460 [1] Short Term Investment 6 ...
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Final Answer

Attached.

Form

1065

U.S. Return of Partnership Income
For calendar year 2019, or tax year beginning

Department of the Treasury
Internal Revenue Service



A Principal business activity

LADIES GARMENTS
C Business code number

, 2019, ending

DECEMBER

2019

, 20 19 .

Go to www.irs.gov/Form1065 for instructions and the latest information.

D Employer identification number

Name of partnership

TAILORED GARMENT
B Principal product or service

JANUARY

OMB No. 1545-0123

PRIMA DONA PARTNERSHIP

Type
or
Print

FEI92-4765

Number, street, and room or suite no. If a P.O. box, see instructions.

E Date business started

City or town, state or province, country, and ZIP or foreign postal code

F Total assets
(see instructions)

10 YEARS AGO

FEI 92-4765432
G Check applicable boxes:

123 Flamingo Drive Haines City, MO 54321
(1)
(2) ✔ Final return
(3)
Initial return
Name change (4)
Address change
(2) ✔ Accrual
(3)
Cash
Other (specify) ▶
H Check accounting method: (1)
I Number of Schedules K-1. Attach one for each person who was a partner at any time during the tax year ▶
J Check if Schedules C and M-3 are attached . . . . . . . . . . .
K Check if partnership: (1)
Aggregated activities for section 465 at-risk purposes

. .
(2)

$

1,214,460
Amended return

(5)
2

. . . . . . . . . . . . . . . ▶
Grouped activities for section 469 passive activity purposes

Tax and Payment

Deductions (see instructions for limitations)

Income

Caution: Include only trade or business income and expenses on lines 1a through 22 below. See instructions for more information.
1a Gross receipts or sales . . . . . . . . . . . . . . . . .
1a
2850000
b Returns and allowances . . . . . . . . . . . . . . . .
1b
27000
c Balance. Subtract line 1b from line 1a . . . . . . . . . . . . . . . . . . . .
1c
2,823,000
2
Cost of goods sold (attach Form 1125-A) . . . . . . . . . . . . . . . . . .
2
1,410,000
3
Gross profit. Subtract line 2 from line 1c . . . . . . . . . . . . . . . . . . .
3
1,413,000
4
Ordinary income (loss) from other partnerships, estates, and trusts (attach statement) . . . .
4
0
5
Net farm profit (loss) (attach Schedule F (Form 1040 or 1040-SR)) . . . . . . . . . .
5
0
6
Net gain (loss) from Form 4797, Part II, line 17 (attach Form 4797) . . . . . . . . . .
6
0
7
Other income (loss) (attach statement) . . . . . . . . . . . . . . . . . . .
7
27,500
8
Total income (loss). Combine lines 3 through 7 . . . . . . . . . . . . . . . .
8
835,700
9
Salaries and wages (other than to partners) (less employment credits) . . . . . . . . .
9
132,000
10
Guaranteed payments to partners . . . . . . . . . . . . . . . . . . . . .
10
80,000
11
Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . .
11
63,800
12
Bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
24,000
13
Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
14,600
14
Taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . . . .
14
12,200
15
Interest (see instructions) . . . . . . . . . . . . . . . . . . . . . . . .
15
25,000
16a Depreciation (if required, attach Form 4562) . . . . . . . . . .
16a
52,900
b Less depreciation reported on Form 1125-A and elsewhere on return .
16b
16c
52,900
17
Depletion (Do not deduct oil and gas depletion.) . . . . . . . . . . . . . . .
17
0
18
Retirement plans, etc. . . . . . . . . . . . . . . . . . . . . . . . . .
18
0
19
Employee benefit programs . . . . . . . . . . . . . . . . . . . . . . .
19
0
20
Other deductions (attach statement) . . . . . . . . . . . . . . . . . . . .
20
123,300
21
Total deductions. Add the amounts shown in the far right column for lines 9 through 20 . . .
21
527800
22
Ordinary business income (loss). Subtract line 21 from line 8 . . . . . . . . . . .
22
307900
23
Interest due under the look-back method—completed long-term contracts (attach Form 8697) .
23
24
Interest due under the look-back method—income forecast method (attach Form 8866) . . .
24
25
BBA AAR imputed underpayment (see instructions) . . . . . . . . . . . . . . .
25
26
Other taxes (see instructions) . . . . . . . . . . . . . . . . . . . . . .
26
27
Total balance due. Add lines 23 through 26 . . . . . . . . . . . . . . . . .
27
28
Payment (see instructions) . . . . . . . . . . . . . . . . . . . . . . .
28
29
Amount owed. If line 28 is smaller than line 27, enter amount owed . . . . . . . . . .
29
30
Overpayment. If line 28 is larger than line 27, enter overpayment . . . . . . . . . .
30

Signature of partner or limited liability company member

Print/Type preparer’s name

Firm’s name

Preparer’s signature



Paid
Preparer
Use Only



Sign
Here

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge
and belief, it is true, correct, and complete. Declaration of preparer (other than partner or limited liability company member) is based on all information of
which preparer has any knowledge.
May the IRS discuss this return
with the preparer shown below?
See instructions.
Yes
No

Date
Date

PTIN

Firm’s EIN ▶



Firm’s address ▶

For Paperwork Reduction Act Notice, see separate instructions.

Check
if
self-employed

Phone no.
Cat. No. 11390Z

Form 1065 (2019)

Form 1...

JesseCraig (17948)
UCLA

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