Description
1065 Tax Return
Feeny University, LLC serves as tutors and instructors for college students in the Philadelphia area. Relevant information is as follows:
- The LLC’s Federal ID number is 35-8675309
- Feeny uses the cash basis and the calendar year
- The LLC began operations on September 24, 1993
- The current address is 5688 James Highway, Suite 1000, Philadelphia, PA 19120
- Feeny is comprised of four equal members: Cory Matthews (321-45-6789), Eric Matthews (987-65-4321), Shawn Hunter (101-01-0101), and Topanga Lawrence-Matthews (010-10-1010)
The following information was taken from the LLC’s income statement for 2016:
Income Statement | |||
Revenues | |||
Fees and Commissions | $5,500,000 | ||
Taxable interest income from bank deposits | 3,800 | ||
Tax-exempt interest | 2,900 | ||
Net gains | 7,500 | ||
Total revenues | $5,514,200 | ||
Expenses | |||
Advertising and public relations | $475,000 | ||
Charitable contributions | 44,000 | ||
Section 179 expense | 82,000 | ||
Employee salaries and wages | 995,000 | ||
Guaranteed payment, Cory Matthews, office manager | 550,000 | ||
Guaranteed payment, other members | 690,000 | ||
Meals and Entertainment | 194,000 | ||
Travel | 325,000 | ||
Legal and accounting fees | 130,000 | ||
Office rentals paid | 95,000 | ||
Interest expense on operating line of credit | 8,000 | ||
Liability insurance premium | 60,000 | ||
Office expense | 190,000 | ||
Payroll taxes | 90,000 | ||
Utilities | 65,000 | ||
Total expenses | $3,993,000 |
During the past few years, Feeny University has taken advantage of bonus depreciation and §179 deductions and fully remodeled the premises and upgraded its leasehold improvements. This year, Feeny wrapped ups it’s remodeling with the purchase of $82,000 of office furniture, for which it will claim a §179 deduction. Feeny University uses the same cost recovery methods for both tax and financial purposes. There is no depreciation adjustment for alternative minimum tax purposes.
Feeny invests much of its excess cash in non-dividend-paying growth stocks and tax-exempt securities. During the year, the LLC sold two securities. On July 4, 2016, the company purchased 1,500 shares of Jules, Inc. stock for $130,000; it sold those shares on December 6, 2016 for $130,500. On January 10, 2006, Feeny purchased 2,500 shares of Bait, Inc. stock for $102,000; it sold those shares for $106,000 on December 6, 2016. Both sales were reported by Feeny’s broker on a 1099-B with basis information. Feeny also sold equipment originally costing $7,400 when purchased on February 2, 2005, for $3,000 on June 15, 2016. The equipment had been fully depreciated.
Net income per books is $1,521,200. The firm’s activities do no constitute “qualified production activities” for purposes of the §199 deduction. On January 1, 2016, the members’ capital accounts equalled $365,175 each. No additional capital contributions were made in 2016. In addition to their guaranteed payments, each member withdrew $350,000 cash during the year.
Feeny’s book balance sheet as of December 31, 2016 is as follows.
Beginning | Ending | |
Cash | $1,283,500 | $ ?? |
Tax-exempt securities | 110,000 | 140,000 |
Marketable securities | 217,200 | 320,200 |
Leasehold improvements, furniture, and equipment | 1,009,000 | 1,050,600 |
Accumulated depreciation | (1,009,000) | (1,050,600) |
Total assets | $1,610,700 | $ ?? |
Line of credit for operations | $150,000 | 150,000 |
Capital, Cory | 365,175 | ?? |
Capital, Eric | 365,175 | ?? |
Capital, Shawn | 365,175 | ?? |
Capital, Topanga | 365,175 | ?? |
Total liabilities and capital | $1,000,000 | $ ?? |
Explanation & Answer
Attached.
1065
Form
Department of the Treasury
Internal Revenue Service
A Principal business activity
U.S. Return of Partnership Income
For calendar year 2016, or tax year beginning
▶
Tutoring setvices
C Business code number
D Employer identification number
Name of partnership
Type
or
Print
35-8675309
E Date business started
Number, street, and room or suite no. If a P.O. box, see the instructions.
September 24, 1993
5688 James Highway, Suite 1000
City or town, state or province, country, and ZIP or foreign postal code
F Total assets (see the
instructions)
Philadelphia, PA 19120
611000
I
J
2016
.
Feeny University, LLC
B Principal product or service
H
, 20
Information about Form 1065 and its separate instructions is at www.irs.gov/form1065.
tutoring
G
OMB No. 1545-0123
, 2016, ending
$1,610,700
$
(1)
Initial return (2)
Final return (3)
Name change (4)
Address change (5)
Technical termination - also check (1) or (2)
(6)
Other (specify) ▶
Check accounting method: (1) ✔ Cash
(2)
Accrual
(3)
Number of Schedules K-1. Attach one for each person who was a partner at any time during the tax year ▶ 1
Check applicable boxes:
Check if Schedules C and M-3 are attached
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
00
Amended return
.
.
.
.
.
Deductions
(see the instructions for limitations)
Income
Caution. Include only trade or business income and expenses on lines 1a through 22 below. See the instructions for more information.
1a
b
c
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16a
b
17
18
19
20
21
22
Signature of general partner or limited liability company member manager
Print/Type preparer’s name
Firm’s name
Preparer’s signature
▲
Paid
Preparer
Use Only
$5,500,000
00
$0
$5,500,000
$0
00
00
00
00
00
$0
$7,500
$3,800
00
$5,511,300
$995,000
00
00
$1,240,000
$0
$0
00
00
00
$95,000
$90,000
$8,000
00
00
00
$0
$0
00
00
$0
$0
$1,136,000
00
00
00
$3,564,000
$1,947,300
00
00
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 general partner or limited liability company member manager)
is based on all information of which preparer has any knowledge.
▲
Sign
Here
$5,500,000
00
1a
Gross receipts or sales . . . . . . . . . . . . .
$0
00
Returns and allowances . . . . . . . . . . . .
1b
Balance. Subtract line 1b from line 1a . . . . . . . . . . . . . . . . . .
1c
Cost of goods sold (attach Form 1125-A) . . . . . . . . . . . . . . . .
2
Gross profit. Subtract line 2 from line 1c . . . . . . . . . . . . . . . . .
3
Ordinary income (loss) from other partnerships, estates, and trusts (attach statement) . .
4
Net farm profit (loss) (attach Schedule F (Form 1040)) . . . . . . . . . . . .
5
Net gain (loss) from Form 4797, Part II, line 17 (attach Form 4797) . . . . . . . .
6
Other income (loss) (attach statement) . . . . . . . . . . . . . . . . .
7
Total income (loss). Combine lines 3 through 7 . . . . . . . . . . . . . .
8
Salaries and wages (other than to partners) (less employment credits) . . . . . . .
9
Guaranteed payments to partners . . . . . . . . . . . . . . . . . . .
10
Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . .
11
Bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
Taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . .
14
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
Depreciation (if required, attach Form 4562) . . . . . .
16a
Less depreciation reported on Form 1125-A and elsewhere on return 16b
16c
Depletion (Do not deduct oil and gas depletion.) . . . . . . . . . . . . .
17
Retirement plans, etc. . . . . . . . . . . . . . . . . . . . . . . .
18
Employee benefit programs . . . . . . . . . . . . . . . . . . . . .
19
Other deductions (attach statement) . . . . . . . . . . . . . . . . . .
20
Total deductions. Add the amounts shown in the far right column for lines 9 through 20 .
21
22
Ordinary business income (loss). Subtract line 21 from line 8 . . . . . . . . .
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 (2016)
Form 1065 (2016)
Schedule B
1
a
c
e
2
3
Page
What type of entity is filing this return? Check the applicable box:
Domestic general partnership
b
Domestic limited partnership
✔
Domestic limited liability company
d
Domestic limited liability partnership
Foreign partnership
f
Other ▶
At any time during the tax year, was any partner in the partnership a disregarded entity, a partnership (including
an entity treated as a partnership), a trust, an S corporation, an estate (other than an estate of a deceased partner),
or a nominee or similar person? . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yes
No
✔
At the end of the tax year:
Did any foreign or domestic corporation, partnership (including any entity treated as a partnership), trust, or taxexempt organization, or any foreign government own, directly or indirectly, an interest of 50% or more in the profit,
loss, or capital of the partnership? For rules of constructive ownership, see instructions. If “Yes,” attach Schedule
B-1, Information on Partners Owning 50% or More of the Partnership . . . . . . . . . . . . . . .
✔
b Did any individual or estate own, directly or indirectly, an interest of 50% or more in the profit, loss, or capital of
the partnership? For rules of constructive ownership, see instructions. If “Yes,” attach Schedule B-1, Information
on Partners Owning 50% or More of the Partnership
. . . . . . . . . . . . . . . . . . . .
✔
a
4
a
At the end of the tax year, did the partnership:
Own directly 20% or more, or own, directly...