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PARTNERSHIP TAX RETURN PROBLEM 1;Required;? Using the information provided below, 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. Finally, complete Mark Sullivan?s;Schedule K-1.;? Form 4562 for depreciation is not required. Include any tax depreciation or;Section 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 any;gaps.;? The forms, schedules, and instructions can be found at the IRS Web;site ( The instructions can be helpful in completing;the 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 contributed;an equal amount of cash to start the new enterprise. Aspen Ridge is an outdoor;equipment retailer selling camping, fi shing, skiing, and other outdoor gear to the;general public. Mark has a 33.33% profi ts and capital interest and the limited partners;hold the remaining 66.66% of the profi ts and capital interests. Their profi ts and;capital interests have remained unchanged since the partnership was formed. Mark;is actively involved in managing the business while the limited partners are simply;investors.;? 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 calendar;year 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 Statement;For year ending December 31, 2011;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;C-20 Appendix C;Notes;1. Aspen Ridge has total assets of $1,725,800 and total liabilities of $540,300 at;the 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 landscape;photograph 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 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 under Section 179 to;expense 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) to;the partners.;6. Miscellaneous expenses include a $900 fine for violating a local signage ordinance.;7. Aspen Ridge maintains its books using generally accepted accounting;principles.


Paper#74248 | Written in 18-Jul-2015

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