ACT 4495 Troy University Partnership Filed Returns Discussion Paper

User Generated

mbzavrehn

Business Finance

ACT 4495

Troy University

ACT

Description

On January 1, 2010, Natasha Romanoff, an auburn haired beauty, and her friend, Clint Barton opened a lab and small manufacturing facility to make specialized arrows for Hawkeye and to enable work on a serum to cure the effects of gamma radiation on the human body. The two also provide a range of services related to their special talents. After several years, Ms. Romanoff and Mr. Barton, having exhausted their resources and on the brink of a serum break through, decided to take on a partner. The SHIELD Corporation immediately jumped on the chance to further the research of Ms. Romanoff and Mr. Barton; the three entities formed an LLC. The new company decided on the name SHIELD II. All of the original employees stayed with the new LLC and Ms. Romanoff and Mr. Barton retained control of the business with SHIELD II contributing financing. The LLC was officially formed on August 23, 2015.

Unformatted Attachment Preview

ACT 4495 Partnership Return SP 2021 SHIELD II I worked on this return with: _______________________________________________________ _______________________________________________________ _______________________________________________________ _______________________________________________________ _______________________________________________________ _______________________________________________________ This return took approximately __________ hours to complete. ACT 4495 SP 2021 Partnership return On January 1, 2010, Natasha Romanoff, an auburn haired beauty, and her friend, Clint Barton opened a lab and small manufacturing facility to make specialized arrows for Hawkeye and to enable work on a serum to cure the effects of gamma radiation on the human body. The two also provide a range of services related to their special talents. After several years, Ms. Romanoff and Mr. Barton, having exhausted their resources and on the brink of a serum break through, decided to take on a partner. The SHIELD Corporation immediately jumped on the chance to further the research of Ms. Romanoff and Mr. Barton; the three entities formed an LLC. The new company decided on the name SHIELD II. All of the original employees stayed with the new LLC and Ms. Romanoff and Mr. Barton retained control of the business with SHIELD II contributing financing. The LLC was officially formed on August 23, 2015. • SHIELD II is located at 101 Triskelion Place, Washington, D.C. 20001. • SHIELD II’s Employer Identification Number is 91-3659394. • SHIELD II’s business activity is miscellaneous manufacturing. • The two general partners/members are active in the management of SHIELD II, the other is a silent partner. • Natasha Romanoff’s Social Security number is 999-49-1234. Her address is 1600 Philadelphia Ave, Washington, D.C. 20002. • Cliff Barton’s Social Security number is 999-49-1234. His address is 1600 Porter Ave, Washington, D.C. 20002. • SHIELD’s employer identification number is 99-9654321. Their address is 1600 Pittsburg Ave, Washington, D.C. 20003. • SHIELD II uses the accrual method of accounting and has a calendar year-end. Required: • Using the information provided below, complete SHIELD II’s 2020 Form 1065 and any form required to provide information to the partners. Complete Natasha Romanoff’s Form 1040, filling it in completely with information from the LLC and any other information given. • Forms 4562 and 4797 are not required. The only tax forms required are the Form 1065 and the Form 1040 already mentioned, with all of the required schedules. Use the amount of tax depreciation and §179 expense provided in the income statement and the information in #6 to complete the appropriate lines on the required tax returns. • The balance sheet on the Form 1065 is not required. • If any information is missing, use reasonable assumptions to fill in any gaps, and document those assumptions on a separate page, clearly labeled. IF you feel there is any absolutely crucial information missing, please let me know and I will ask the client for you. • The forms, schedules, and instructions can be found at the IRS Web site (www.irs.gov). The instructions can be helpful in completing the forms. Additionally, I highly recommend you set up a spreadsheet to help keep everything straight. IF you use one, please turn in the electronic copy thru Canvas. Turn the assignment in, on paper, stapled in the following order: Form 1065, and any required Schedules, including those needed by the partners/members, Natasha’s Form 1040 and any required schedules, plus your assumptions, workpapers, and answer to the final question. Assume that Natasha files single and uses the standard deduction and made estimated tax payments totaling $5,000. Her only income comes from the LLC, unless otherwise noted. Neatness and organization count. This return is due March 18, 2021 at 12:30 pm. The following is the SHIELD II 2020 GAAP income statement: SHIELD II Income Statement For year ending December 31, 2020 Revenue Arrow sales Chemical Formula Development Investigations Nemesis Vanquishing Total Operating Revenue $ 10,000 15,000 300,000 250,000 575,000 Other income Rental income from beach property (net) Interest income Loss on sale of securities Dividend income 12,802 1 2,460 2 (2,550) 3 900 4 Total Other income 13,612 Total income Operating expenses Salaries and wages (including partners' guaranteed payments) Property taxes Payroll taxes Depreciation and 179 expense Advertising Bad debt expense Office expense Repairs Miscellaneous Taxes and licenses Meals Retirement contributions Interest on accounts payable Charitable contributions Health insurance premiums Utilities Life insurance premiums $ 588,612 $ 200,000 4,900 16,830 79,640 3,300 3,800 4,100 5,437 14,436 1,000 3,560 23,667 1,200 15,000 22,584 6,785 8,910 Total Operating expenses NET INCOME 415,149 $ 173,463 5 6 7 8 9 10 11 12 13 14 Notes: 1. The LLC owns a small beach condo that it uses as a base when they undertake a job at Mexico Beach. They also rent it during the year to provide extra income. The condo has never been used for personal purposes. 2. The LLC received interest income from the following sources: Interest on D.C. municipal bonds Bank interest on savings Interest on accounts receivable Total $1,500 200 760 $2,460 3. On February 3, 2020, the LLC bought 1000 shares of Gizmo, Ltd., for $8,750. All the shares were sold for $7,200 on April 4, 2020. Two hundred shares of Gizzy’s Gizmos Inc were sold for $9,600 on September 26, 2020. The stock was purchased on December 1, 2016, for $10,600. 4. The following dividends were received in 2020: NOM (qualified) $600 Nom, Nom, Ltd. (not qualified) 300 Total $900 5. For their services to the company, Natasha and Clint receive annual guaranteed payments of $45,000 each. Natasha and Clint devote most of their time to the business, while SHIELD Corp. is a silent partner. 6. The LLC uses currently allowable tax depreciation methods for tax purposes but has adopted a policy of electing not to take bonus depreciation. For book purposes, the LLC uses straight line depreciation. The LLC purchased new equipment in the current year in the amount of $20,000. This equipment has a five year useful life and no salvage value. They utilize the tax depreciation method for the purchases that most decreases their taxable income. For 2020, MACRS depreciation and Section 179 equals $79,640. SHIELD Corp. has income from other sources of $5,000,000,000. Natasha and Clint have only their income from the company and personal bank interest of $10 each. 7. Of the total bad debt expense, SHIELD II actually wrote off $1,300. 8. Miscellaneous expense includes $4,800 of hazard insurance, bribes and snacks and drinks for the office ($636). $800 of the hazard insurance is for Clint’s home since his job is so dangerous. As a super spy, Natasha must rely on tips from unnamed sources. She bribes the sources for information and accounts for these amounts in the miscellaneous expense account. In 2020, these bribes totaled $9,000. 9. When Natasha paid the business license and privilege tax to the city, she also paid for her dog Wolfie’s license. Since she was writing a check for the total amount out of the LLC account, she included the $50 for Wolfie’s license in the taxes and licenses account. 10. The LLC contributed amounts to the employee’s retirement accounts. Natasha and Clint have personal accounts that they contribute to. 11. The note payable to the bank as well as the accounts payable are treated by the LLC as recourse debt. The Accounts Payable balance increased by $40,000 at the end of the year. Accounts Payable is the only debt held by the company. 12. The LLC donated $15,000 cash to the Red Cross. 13. Employee benefits included health insurance. Natasha’s health insurance policy cost the LLC $3,600 and Clint’s policy cost $5,000. 14. An insurance policy on Natasha’s life was purchased in the prior year. The LLC pays all the premiums and is the beneficiary of the policy. The premiums for the current year were $3,000; no cash surrender value exists for the first or second year of the policy. The company also provides life insurance to its employees. Each employee receives a policy with a face value of $50,000 as an employment benefit. The employee chooses the beneficiary. 15. The LLC maintains its books according to GAAP. 16. The members’ percentage ownership of is 20 percent for SHIELD Corp. and 40 percent each for Natasha and Clint. They agree that profits and losses will be shared according to the same ratio. 17. The members withdrew the following cash amounts from the LLC during the year (in addition to any guaranteed payments): Clint $20,000 Natasha $11,000 18. The partner’s capital balances were as follows as of the end of 2019: SHIELD II $300,000, Natasha $90,000, Clint $ 81,000. Their bases were as follows: SHIELD II $300,0000, Natasha $205,300, Clint $196,300. 18. The LLC Articles of Organization specify that any nondeductible amounts paid by the LLC for benefit of the members should be considered distributions to the members. 23. Assume that liability for debts follows partnership rules, disregarding the limited liability status of the members. The members should be treated as general or limited partners for preparation of this return. Please answer the following: What are the members’ bases in their LLC interests at December 31, 2020?
Purchase answer to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Attached. Please let me know if you have any questions or need revisions.

Running head: PARTNERSHIP FILED RETURNS

Partnership filed Returns
Student's Name
Institutional Affiliation

1

PARTNERSHIP FILED RETURNS
Partnership filed Returns
While practising the trade, an entity is supposed to file the corresponding tax to the IRS,
failure to which the firm receives penalties and goes under possible audit. The IRS will always
investigate firms that practice tax fraud and have the frim pay the penalties applicable in the
given scenarios. Shield 2 gets formed after the initial manufacturing company's founders went
under possible financial trouble, making the partnership formation necessary to save the
partnership. The formation of the partnership under an LLC spells out various rules for filing
returns from the firm to the IRS.
The significant answer in the given task aims to provide the solution to each of the
partnerships bases on LLC interests in the given year ending 31 December 2020. The
determination of the LLC should be based on the regulating laws regarding partnership LLC
bases interests. Shield II is an LLC, meaning that it operates on a limited liability basis. In the
United States, LLC companies operate on a confidential basis targeting partnerships and
corporations. The company structure's adoption makes shield avoid double taxation as when the
firm gets taxed, and no other amount gets deducted from their dividends earned from the
company activity. The company exists as its legal entity, meaning that the members' property
cannot get used to settling company debts.
Simple assumptions regarding to the SHIELD II partnership
Interest = ( income – debts + Cash reserves) * a factor
= (173,463 – 3800+ 23,667) * 3
= (169,663-23,667) *3

2

PARTNERSHIP FILED RETURNS

3

= 145,996 * 3
= 437,998
The 437,998 equals the assumed individual LLC base that the members attainable in the event of
separation. The division of the amount leads to the realization of individual LLC bases.
The IRS tax forms lack various figures and instead gives an assumption, especially regarding the
fact that the information does not say anything about child expenses.
The individuals outlined have no arguable self-employment tax payables
No dependents are making there be a lack of figures for the elements
The filed returns have no spouses meaning the taxed information provided are based on the
provided information. The IRS forms' information is based on the provided data in the statement
of financial position form.


Form

1040 U.S. Individual Income Tax Return 2020

Filing Status
Check only
one box.

(99)

Department of the Treasury—Internal Revenue Service



Single

Married filing jointly

OMB No. 1545-0074

Married filing separately (MFS)

IRS Use Only—Do not write or staple in this space.

Head of household (HOH)

Qualifying widow(er) (QW)

If you checked the MFS box, enter the name of your spouse. If you checked the HOH or QW box, enter the child’s name if the qualifying
person is a child but not your dependent ▶

Your first name and middle initial

Your social security number

Last name

Natasha
If joint return, spouse’s first name and middle initial

Romanoff

9 9 9

Last name

Spouse’s social security number

Home address (number and street). If you have a P.O. box, see instructions.

4 9

-

Presidential Election Campaign
Check here if you, or your
spouse if filing jointly, want $3
ZIP code
to go to this fund. Checking a
box below will not change
Foreign postal code your tax or refund.

City, town, or post office. If you have a foreign address, also complete spaces below.

State

Washington, D.C. 20002
Foreign province/state/county

You

At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?

Standard
Deduction

Were born before January 2, 1956

(1) First name
If more
than four
dependents,
see instructions
and check
here ▶

• Single or
Married filing
separately,
$12,400
• Married filing
jointly or
Qualifying
widow(er),
$24,800
• Head of
household,
$18,650
• If you checked
any box under
Standard
Deduction,
see instructions.

Spouse:

Are blind

Dependents (see instructions):

Standard
Deduction for—

Yes

Spouse


No

Someone can claim:
You as a dependent
Your spouse as a dependent
Spouse itemizes on a separate return or you were a dual-status alien

Age/Blindness You:

Attach
Sch. B if
required.

1 2

Apt. no.

1600 Philadelphia Ave

Foreign country name

-

(2) Social security
number

Last name

Was born before January 2, 1956

(4) ✔ if qualifies for (see instructions):
Child tax credit
Credit for other dependents

(3) Relationship
to you

1

Wages, salaries, tips, etc. Attach Form(s) W-2

2a
3a
4a

Tax-exempt interest .
Qualified dividends .
IRA distributions . .

5a
6a
7

0
Pensions and annuities . .
5a
b Taxable amount .
0
Social security benefits . .
6a
b Taxable amount .
Capital gain or (loss). Attach Schedule D if required. If not required, check here
.

Other income from Schedule 1, line 9 . . . . . . . . .
Add lines 1, 2b, 3b, 4b, 5b, 6b, 7, and 8. This is your total income
Adjustments to income:
From Schedule 1, line 22 . . . . . . . . . . . .

8
9
10
a

.
.
.

.
.
.

2a
3a
4a

.

.

.

.
0
0
0

.

.

.

.

.

.

.

.

.
.

.
.

.
.

.
.

.

.

.

.

1

45,000
1,200
900
45,000

.
.
.

.
.
.

.
.
.

.
.
.

2b
3b
4b

.
.
.

.
.
.

.
.
.

.
.

.
.



5b
6b
7

46,200
47,100
47,100

.
.

.
.

.
.

.
.

.

8
9

47,100
47,100

b Taxable interest
.
b Ordinary dividends .
b Taxable amount . .

.
.

Is blind



173,463
0

. .
10a
Charitable contributions if you take the standard deduction. See instructions
10b
Add lines 10a and 10b. These are your total adjustments to income . . . .

.

.

.

.



10c

173,463

11
12
13

Subtract line 10c from line 9. This is your adjusted gross income . .
Standard deduction or itemized deductions (from Schedule A)
. .
Qualified business income deduction. Attach Form 8995 or Form 8995-A

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.



.
.

11
12
13

168,753
0
0

14
15

Add lines 12 and 13 . . . . . . . . . . . . . . . .
Taxable income. Subtract line 14 from line 11. If zero or less, enter -0- .

.
.

.
.

.
.

.
.

.
.

.
.

.
.

.
.

14
15

0
168,753

b
c

For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions.

Cat. No. 11320B

Form

1040 (2020)

Page 2

Form 1040 (2020)

16
17

Tax (see instructions). Check if any from Form(s): 1
8814
Amount from Schedule 2, line 3
. . . . . . . .

.

18
19
20

Add lines 16 and 17 . . . . . . . .
Child tax credit or credit for other dependents
Amount from Schedule 3, line 7
. . . .

.
.
.

900
0
47,100

.
.
.

.
.
.

.
.
.

21
22
23

47,100
46,200
0

.

.



24

46,200

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

21
22
23

Add lines 19 and 20 . . . . . . . . . . . . . . .
Subtract line 21 from line 18. If zero or less, enter -0- . . . . .
Other taxes, including self-employment tax, from Schedule 2, line 10

.
.
.

.
.
.

.
.
.

.
.
.

24
25

.

.

.

.

.

.

.

.

.

.

.

.

a

Add lines 22 and 23. This is your total tax
Federal income tax withheld from:
Form(s) W-2 . . . . . . . . .

.

.

.

.

.

.

.

.

.

b
c
d

Form(s) 1099 . . . . . .
Other forms (see instructions) .
Add lines 25a through 25c . .

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

25b
25c
. . .

.

.

.

.

.

25d

2020 estimated tax payments and amount applied from 2019 return .
Earned income credit (EIC) . . . . . . . . . . . . .
Additional child tax credit. Attach Schedule 8812 . . . . . .

.
.
.

.

.

.

.

. .
47,100
0

26

0
0

32
33
34

47,100
0
0

35a

0

37

46,200

.
.
.

.
.
.

.
.
.

.
.
.

...


Anonymous
Great! Studypool always delivers quality work.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Content

Related Tags