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federal partnership income tax return forms for AAA Fast Plumbing for the 2012 tax year

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Question;Tax Return 9: PartnershipInstructions:Please complete the required federal partnership income tax return forms for AAA Fast Plumbing for the 2012 tax year, unless instructed otherwise, based upon the facts presented below. Also, if required information is missing, use reasonable assumptions to fill in the gaps.XXXXX XXXXX and Devontae Johnson have been life-long friends. Both Michael and Devontae started to work for the same national plumbing repair company immediately after graduating from technical college. After nearly a decade of working for that same company, Michael and Devontae decided to venture out on their own and form their own plumbing company called AAA Fast Plumbing Repair (AAA). They formed their business entity as a limited liability company (LLC). Michael and Devontae each own 50% of the company. The company has been successful primarily based upon reputation and the fact that AAA is available 24 hours a day, seven days a week. Although AAA charges a premium for after normal business hour calls, most of its competitors will not perform the services past 9 p.m. and as a result, AAA finds itself often as one of the only available choices for middle of the night emergencies.AAA has several employees and, as a result of implementing technology solutions to aid in its call dispatch program, AAA has been able to better expand its service area to now include a three-county area instead of just one.Information relating to AAA and its owners is as follows:Name of Company: AAA Fast Plumbing Repair, LLCAddress: 1456 East Buena Vista Blvd.Los Angeles, CA 90001 (has not changed since inception)Company formed and started: January 1, 2010Accounting Method: CashTax-year end: December 31Employer Identification Number: 34-1234567Members? Information:XXXXX XXXXX1515 West Bloomington StreetLos Angeles, CA 90001SSN- XXX-XX-XXXXProfit/Loss/Capital Membership interest is 50%.Devontae Johnson19 East Violet CircleLos Angeles, CA 90001SSN-XXX-XX-XXXXProfit/Loss/Capital Membership interest is 50%.Other information:? AAA is a domestic limited liability company? Michael and Devontae are not related.? Michael and Devontae are both U.S. citizens.? Both Michael and Devontae are managing members.? AAA has not and did not file a Form 8893 or anything similar to it this year or in the past? AAA is not a publicly traded partnership? During the year no debt was cancelled or forgiven in relation to AAA.? AAA is not required to file a Form 8918? AAA did not have or control a foreign bank account or have authority over any such financial account? AAA was not the grantor of or a transferor to a foreign trust? AAA has never made a Section 754 election? AAA has never entered into a like-kind exchange or distributed a tenancy-in-common or other undivided interest in partnership property? AAA has never been required to file Form 8858? Michael and Devontae are both U.S. citizens? AAA was required to file Form(s) 1099 related to certain payments it made during the year and those forms were filed on a timely basis? AAA was not required to file any Form(s) 5471 during the year? Michael is the agreed upon Tax Matters Partner (TMP)? Both Michael and Devontae are active in the business and work full-time for AAA? The debt owed to First National Bank is a non-recourse obligation and neither Michael nor Devontae have guaranteed its repayment (see balance sheet below).? During the year, Michael and Devontae each contributed $20,000 to the capital of AAA? AAA does not maintain any inventory. AAA purchases supplies and has a policy of expensing such purchases as paid for tax and book purposes? During the year, Michael and Devontae each received a $75,000 distribution from each of their respective capital accounts?Financial Statements:Balance SheetAssets: 1/01/CY 12/31/CYCash $ 30,000 $ 45,000Tax-exempt Securities 100,000 100,000Building 4,000,000 4,000,000Less: Acc. Depreciation (550,000) (650,000)Equipment 2,500,000 3,250,000Less: Acc. Depreciation (1,250,000) (1,435,000)Land 1,000,000 1,000,000Total Assets: $5,830,000 $6,310,000Liabilities and Capital:Note Payable-First National Bank $4,500,000 $4,879,360Note Payable-XXXXX XXXXX 300,000 300,000Note Payable-Devontae Johnson 200,000 200,000Capital Account-MR 415,000 465,320Capital Account-DJ 415,000 465,320Total Liabilities and Capital: $5,830,000 $6,310,000?Income Statement for the year ending December 31, 20CYItem AmountIncome:Service Revenue-Cash $ 243,565Service Revenue-Credit Cards $1,422,710Consulting Revenue-Cash $ 50,950Consulting Revenue-Credit Cards $ 155,005Interest Income-First National Bank $ 1,540Municipal Bond Interest Income $ 2,500Total Income

 

Paper#42637 | Written in 18-Jul-2015

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