ACCT 560 DeVry University Tax Returns Accounting Worksheet
In this course you will work throughout the term on a Course Project to prepare a partnership tax return. This assignment deliverable is due no later than Saturday of Week 8 and must be uploaded to the Course Project: Partnership Tax Return Submission link found under the Week 8 Modules section.Download the partnership tax return project instructions (Links to an external site.) and complete the IRS Form 1065 and two accompanying Schedule K-1s (one for each partner) for the fictitious Jamco Turf company. As part of this tax return, you will also need to prepare Schedule D, IRS Form 1125-A, and IRS Form 4797. Line items that indicate “attach statement” or reflect totals not directly computed on the same form must be accompanied by an attached statement. For example, for Form 1065, line 20 – Other deductions, attach to your deliverable package a Word or PDF “Statement” document displaying the items and computations that result in the figure entered on line 20.Provide calculations for each partner's inside and outside basis in Jamco at the beginning and end of the company's first year of business. Display the calculations for Jamco's basis in the new assets held at the beginning of the year and also show Jamco’s revised basis at the end of the year of operation. Depreciation will be a value provided in the given data.Here are some check figures to assist as you work individually on the partnership tax return.Form 1065, line 14: $133,300Form 1065, line 20: $229,256Form 1065, Schedule K, line 13d: $9,000 (should include an attached statement to show computation)Form 1065, Schedule K, line 14a: Hint: Use worksheet in Form 1065 Instructions to computeForm 1065, Schedule K, line 18c: $296,000 (should include an attached statement to show computation)Form 1065, Schedule L, line 9b: $75,400 in column (c) and $165,400 in column (d)Jamco Turf Partnership Tax Return Project for the Year Ended December 31, 2020 Jamco Turf was organized on February 22, 2020, by Jon Jones and Billy Burt, both as general partners. Jon contributed $270,000 cash and SBUX stock (acquired 01/01/2018) worth $30,000 for a 60% interest in the partnership, and Billy contributed $200,000 cash for a 40% interest. Jon’s Social Security number is 123-45-6789 and Billy’s is 987-65-4321. Jamco’s Employer ID number is 12-3456789. Jamco began business on March 1, 2020. Jamco is a commercial landscaping business located at 118812 Josey Lane, Louisville, KY 40018. Jamco uses the accrual method of accounting, the first-in, first-out (FIFO) inventory method, and calendar-year reporting. Distributions to the owners in 2020 included $144,000 to Jon and $96,000 to Billy. Jamco’s debt in this scenario is considered recourse debt. Addresses for the owners are: Jon Jones, 3513 Jackson Street, Louisville, KY 40018 Billy Burt, 2532 Sugarbush Lane, Louisville, KY 40018 To complete this project, you will prepare a partnership tax return including the IRS Form 1065 and accompanying Schedule D, two Schedule K-1s (one for each partner), and supporting IRS Form 1125-A and IRS Form 4797. Jamco’s 2020 financial statements are displayed on the following pages.Jamco Turf Income Statement for the Year Ended December 31, 2020Sales4,700,000Returns and Allowances(50,000)Net Sales4,650,000Beginning Inventory0Purchases4,050,0004,050,000Ending Inventory(1,700,000)(2,350,000)Gross Profit2,300,000ExpensesSalaries (a)980,000Depreciation (b)75,400Advertising30,000Bad Debts39,000Rent100,000Interest (c)39,500Utilities38,300Delivery Expense34,900Office Supplies46,200Repairs and Maintenance29,000Organization Expense (d)6,000Meals80,000Insurance Expense (e)36,000Payroll Taxes113,3002019 Federal Income Tax Deposits250,000Other Taxes20,000Fines and Penalties (Traffic)1,000Accounting and Legal12,000Charitable Contributions – Red Cross18,000Real Estate Taxes on Investment Land8001,949,400Operating Income350,600Other IncomeGain on Sale of Stock (f)4,000Gain on Sale of Delivery Truck (g)8,600Interest on County Tax Exempt Bonds1,100Interest on CDs11,500Dividends from US Corporations (h)5,60030,800Net Income381,400Jamco Turf Notes to Income Statement a. The salary's total includes guaranteed payments to partners: Jon Jones $200,000, Billy Burt $50,000.b. Depreciation for tax purposes: $112,700.c. $2,500 is allocable to investments. The remainder is related to Jamco’s business.d. $6,000 in fees were incurred in organizing Jamco.e. Includes $5,000 of premiums for term life insurance on Jon and Billy, for which Jamco is the beneficiary of these policies. In addition, $4,300 of the health insurance premiums (a guaranteed payment) are attributable to coverage for Jon and his family, and $3,900 (a guaranteed payment) are attributable to coverage for Billy and his family.f. Sold 500 shares of SBUX stock for $35,000 on December 1, 2020. The stock had been purchased by Jon on July 1, 2005 for $20,000 and was contributed by him on February 22, 2020, when it was worth $30,000. Also, on December 1, 2020, sold 100 shares of Grand View, Inc. for $2,000. The stock had been purchased on March 1, 2020 for $3,000. At no time did Jamco own more than 1% of the outstanding stock of these corporations. Assume that the basis for stock was already reported to the IRS, so no Form 8949 is required.g. Sold a delivery truck on September 23, 2020 for $35,000. The truck had originally been purchased on May 1, 2020 for $33,400. Depreciation taken for book purposes was $7,000. Depreciation taken for tax purposes was $9,350.h. Jamco owns less than 20% of the outstanding stock of each of these corporations.Jamco Turf Balance Sheet December 31, 2020AssetsCash113,000Accounts Receivable300,000Less Allowance for Bad Debts29,000271,000Inventory1,700,000Tax Exempt Securities17,000Other Current Assets40,000Other Investments85,000Land70,000Buildings240,800Less Accumulated Depreciation75,400165,400Total Assets2,461,400Liabilities and EquityAccounts Payable375,000Mortgages, Notes Payable in < 1 year185,000Other Current Liabilities70,000Mortgages, Notes Payable in > 1 year1,190,000Jon Jones, Capital Account Billy Burt, Capital Account300,000 200,000Jon Jones, Current Account Billy Burt, Current Account84,840 56,560Total Liabilities and Equity2,461,400Jamco Turf Statement of Changes in Current Account for the Year Ended December 31, 2020Beginning Balance0Net Income381,400Distributions(240,000)Balance, December 31, 2020141,400