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Question;PARTNERSHIP TAX RETURN PROBLEM 1Required:? Using the information provided below, complete Aspen Ridge limitedpartnership?s page 1 of Form 1065, complete Schedule K on page 4 ofForm 1065, complete lines 1 and 2 of the Analysis of Net Income (Loss) atthe top of page 5 of Form 1065, and complete Schedules M-1 and M-2 atthe bottom of page 5 of Form 1065. Finally, complete Mark Sullivan?sSchedule K-1.? Form 4562 for depreciation is not required. Include any tax depreciation orSection 179 expense on the appropriate line of page 1 of Form 1065 orSchedule K.? If any information is missing, use reasonable assumptions to fill in anygaps.? The forms, schedules, and instructions can be found at the IRS Website ( The instructions can be helpful in completingthe forms.Facts:The Aspen Ridge limited partnership was formed on April 1, 2009, by Mark Sullivan,its general partner, and two other limited partners when they each contributedan equal amount of cash to start the new enterprise. Aspen Ridge is an outdoorequipment retailer selling camping, fi shing, skiing, and other outdoor gear to thegeneral public. Mark has a 33.33% profi ts and capital interest and the limited partnershold the remaining 66.66% of the profi ts and capital interests. Their profi ts andcapital interests have remained unchanged since the partnership was formed. Markis actively involved in managing the business while the limited partners are simplyinvestors.? Aspen Ridge is located at 1065 North 365 South, Ogden, UT, 84401.? The employer identification number for Aspen Ridge is 85-8976654.? Aspen Ridge uses the accrual method of accounting and has a calendaryear end.? Mark?s address is 543 Wander Lane, Holliday, UT 84503.The following is Aspen Ridge?s 2011 income statement for books:Aspen Ridge Income StatementFor year ending December 31, 2011Sales 965,500Sales Returns and Allowances (9,700)Cost of Goods Sold (538,200)Gross Profit from Operations 417,600Other Income:Interest from money market account 3,200Gain from sale of photograph 34,000Gross Income 454,800C-20 Appendix CNotes:1. Aspen Ridge has total assets of $1,725,800 and total liabilities of $540,300 atthe beginning of the year and total assets of $2,065,300 and total liabilities of$806,640 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 landscapephotograph 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 is nowhangs on the wall. The $34,000 recognized gain from the sale is reflected in theincome statement above.4. For tax purposes, Aspen Ridge has consistently elected under Section 179 toexpense any furniture or fixtures purchased 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 20th, Aspen Ridge distributed $180,000 ($60,000 per partner) tothe partners.6. Miscellaneous expenses include a $900 fine for violating a local signage ordinance.7. Aspen Ridge maintains its books using generally accepted accountingprinciples.


Paper#39587 | Written in 18-Jul-2015

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