Tax Return Problems – formerly Appendix CPartnership Tax Return Problem 1Required:· For 2021, complete Aspen Ridge limited partnership’s page 1 of Form 1065; complete Schedule K on page 4 of...

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Please complete the 2021 Federal income tax return for Aspen Ridge based upon the facts presented in the attachment.













Tax Return Problems – formerly Appendix C Partnership Tax Return Problem 1 Required: · For 2021, complete Aspen Ridge limited partnership’s page 1 of Form 1065; complete Schedule K on page 4 of Form 1065; complete lines 1 and 2 of the Analysis of Net Income (Loss) at the top of page 5 of Form 1065; and complete Schedules M-1 and M-2 at the bottom of page 5 of Form 1065 (you may skip Schedule L). Finally, complete Mark Sullivan’s Schedule K-1. · Form 4562 for depreciation and Schedule D for capital gains are not required. Include any tax depreciation or §179 expense on the appropriate line of page 1 of Form 1065 or Schedule K. · If any information is missing, use reasonable assumptions to fill in the gaps. · The forms, schedules, and instructions can be found at the IRS website (www.irs.gov). The instructions can be helpful in completing the forms. Facts: The Aspen Ridge limited partnership was formed on April 1, 2010, by Mark Sullivan, its general partner, and two other limited partners when they each contributed an equal amount of cash to start the new enterprise. Aspen Ridge is an outdoor equipment retailer selling camping, fishing, skiing, and other outdoor gear to the general public. Mark has a 33.33 percent profits, loss, and capital interest and the limited partners hold the remaining 66.66 percent of the profits, loss, and capital interests. Their profits, loss, and capital interests have remained unchanged since the partnership was formed. Mark is actively involved in managing the business while the limited partners are only investors, and Mark receives an annual guaranteed distribution of $35,000 for his services managing the business. · Aspen Ridge is located at 1065 North 365 South, Ogden, Utah 84401. · The employer identification number for Aspen Ridge is 85-8976654. · Aspen Ridge uses the accrual method of accounting and has a calendar year-end. · Mark’s address is 543 Wander Lane, Holladay, Utah 84503, and his Social Security number is 445-27-3584. His phone is 801-555-5555. Mark is designated as the Partnership Representative in the partnership agreement. The following is Aspen Ridge’s 2021 income statement: Aspen Ridge Income Statement For year ending December 31, 2021 Sales $  965,500  Sales returns and allowances (9,700) Cost of goods sold (538,200) Gross profit from operations $ 417,600  Other income: Interest from money market account $ 3,200  Gain from sale of photograph 34,000  Gross income $  454,800  Expenses: Employee wages $   95,400  Interest on accounts payable 2,700  Payroll and property taxes 10,800  Supplies 4,300  Rent on retail building 18,500  Depreciation on furniture and fixtures 4,550  Advertising 8,300  Guaranteed payments to Mark Sullivan 35,000  Utilities 6,400  Accounting and legal services 4,400  Business meals (fully deductible) 2,240  Cash charitable contribution to the Sierra Club 3,300  Miscellaneous expenses 5,750  Total expenses  (201,640) Net income for books $ 253,160  Notes: 1. Aspen Ridge has total assets of $1,249,700 and total liabilities of $447,067 at the beginning of the year, and total assets of $1,494,600 and total liabilities of $618,867 at the end of the year. 2. Partnership liabilities consist of accounts payable, and Mark, as general partner, is legally responsible for paying these liabilities if the partnership does not. 3. Two years ago, Aspen Ridge purchased an original Ansel Adams outdoor landscape photograph (a collectible) with the intent to display it permanently in the retail store. This year, however, the photograph was sold to a local ski lodge where it now hangs on the wall. The $34,000 recognized gain from the sale is reflected in the income statement above. 4. For tax purposes, Aspen Ridge has consistently elected out of bonus depreciation and has elected instead under §179 to expense any furniture or fixtures placed in service every year since it was formed. As a result, it does not have a tax basis in any of its depreciable assets. This year, Aspen Ridge expensed $17,300 of signs and display cases for tax purposes. 5. On November 20, Aspen Ridge distributed $180,000 ($60,000 per partner) to the partners. 6. Miscellaneous expenses reported on the income statement include a $900 fine for violating a local signage ordinance. 7. All three partners’ capital accounts each had a tax-basis opening balance of $279,511. 8. Assume that Aspen Ridge did not make any payments that would require it to file Form(s) 1099. 9. For purposes of the Qualified Business Income Deduction (§199A), the unadjusted basis of qualified property immediately after acquisition (UBIA) is $1,240,800.
Answered 2 days AfterDec 03, 2022

Answer To: Tax Return Problems – formerly Appendix CPartnership Tax Return Problem 1Required:· For 2021,...

Rochak answered on Dec 05 2022
37 Votes
2021 Form 1065
Form 1065
2021
U.S. Return of Partnership Income
Department of the Treasury
Internal Revenue Service ▶ Go to www.irs.gov/Form1065 for instructions and the latest information.
OMB No. 1545-0123
For calendar year 2021, or tax year beginning , 2021, ending , 20 .
Type
or
Print
Name of partnership
Number, street, and room or suite no. If a P.O. box, see instructions.
City or town, state or province, country, and ZIP or foreign postal code
A Principal business activity
B Principal product or service
C Business code number
D Employer identification number
E Date business started
F Total assets
(see instructions)
$
G Check applica
ble boxes: (1) Initial return (2) Final return (3) Name change (4) Address change (5) Amended return
H Check accounting method: (1) Cash (2) Accrual (3) Other (specify) ▶
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) Grouped activities for section 469 passive activity purposes
Caution: Include only trade or business income and expenses on lines 1a through 22 below. See instructions for more information.
In
co
m
e
1a Gross receipts or sales . . . . . . . . . . . . . . . . . 1a
b Returns and allowances . . . . . . . . . . . . . . . . 1b
c Balance. Subtract line 1b from line 1a . . . . . . . . . . . . . . . . . . . . 1c
2 Cost of goods sold (attach Form 1125-A) . . . . . . . . . . . . . . . . . . 2
3 Gross profit. Subtract line 2 from line 1c . . . . . . . . . . . . . . . . . . . 3
4 Ordinary income (loss) from other partnerships, estates, and trusts (attach statement) . . . . 4
5 Net farm profit (loss) (attach Schedule F (Form 1040)) . . . . . . . . . . . . . . 5
6 Net gain (loss) from Form 4797, Part II, line 17 (attach Form 4797) . . . . . . . . . . 6
7 Other income (loss) (attach statement) . . . . . . . . . . . . . . . . . . . 7
8 Total income (loss). Combine lines 3 through 7 . . . . . . . . . . . . . . . . 8
D
ed
uc
tio
ns
(s
ee
in
st
ru
ct
io
ns
fo
r l
im
ita
tio
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) 9 Salaries and wages (other than to partners) (less employment credits) . . . . . . . . . 9
10 Guaranteed payments to partners . . . . . . . . . . . . . . . . . . . . . 10
11 Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . . 11
12 Bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
13 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
14 Taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . . . . 14
15 Interest (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . 15
16a Depreciation (if required, attach Form 4562) . . . . . . . . . . 16a
b Less depreciation reported on Form 1125-A and elsewhere on return . 16b 16c
17 Depletion (Do not deduct oil and gas depletion.) . . . . . . . . . . . . . . . 17
18 Retirement plans, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 18
19 Employee benefit programs . . . . . . . . . . . . . . . . . . . . . . . 19
20 Other deductions (attach statement) . . . . . . . . . . . . . . . . . . . . 20
21 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 . . . . . . . . . . . 22
Ta
x
an
d
P
ay
m
en
t 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
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.

Signature of partner or limited liability company member

Date
May the IRS discuss this return
with the preparer shown below?
See instructions. Yes No
Paid
Preparer
Use Only
Print/Type preparer’s name Preparer’s signature Date Check if
self-employed
PTIN
Firm’s name ▶ Firm’s EIN ▶
Firm’s address ▶ Phone no.
For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11390Z Form 1065 (2021)
Form 1065 (2021) Page 2
Schedule B Other Information
Yes No1 What type of entity is filing this return? Check the applicable box:
a Domestic general partnership b Domestic limited partnership
c Domestic limited liability company d Domestic limited liability partnership
e Foreign partnership f Other ▶
2 At the end of the tax year:
a


Did any foreign or domestic corporation, partnership (including any entity treated as a partnership), trust, or tax-
exempt 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 . . . . . . . . . . . . . . . . . . . .
3 At the end of the tax year, did the partnership:
a

Own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of
stock entitled to vote of any foreign or domestic corporation? For rules of constructive ownership, see instructions.
If “Yes,” complete (i) through (iv) below . . . . . . . . . . . . . . . . . . . . . . . . .
(i) Name of Corporation (ii) Employer Identification
Number (if any)
(iii) Country of
Incorporation
(iv) Percentage
Owned in Voting Stock
b

Own directly an interest of 20% or more, or own, directly or indirectly, an interest of 50% or more in the profit, loss,
or capital...
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