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Tax Subject PS6 - Partnership Returns

The rules and procedures for filing partnership returns can be a bit involved. This 10 hour course will help you review the filing rules and procedures of a partnership tax return.

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Student Instructions:

Print this page, work on the questions and then submit test by mailing the answer sheet or by completing quiz online.

Instructions to submit quiz online successfully: Step-by-Step check list

Answer Sheet Quiz Online

Most forms are in Adobe Acrobat PDF format.

You will need Adobe Reader to view and print these forms. If you do not already have Adobe Reader installed on your computer, you may download the software for free.

Partnership Return filing situation 1:

The Horse and Carriage Animal Feed Store (EIN 77-8901112) is a partnership between Ramona Kazemi (SSN 504-56-7890), Ross Kazemi (SSN 615-67-8910) and Shirin Delshad (SSN 511-23-4567) that specialize in farm animal feed supply. The partnership address is 36900 Cook Street, Palm Desert, CA 92211. No assets were placed in service in 2012.

Information for Ramona and Ross Kazemi:

Live at 73375 El Paseo Drive, Palm Desert, CA 92260.
Ramona is married to Ross Kazemi and have one child Javad (SSN 623-45-6789 D.O.B. 11/01/2008) living at home with them. All support for the boy comes from Ramona and Ross.

Ramona paid $17,000 in federal estimated payments and another $4,100 in estimated payments to FTB. All payments were made on time every quarter.

Ross paid $12,000 in federal estimated payments and another $2,000 in estimated payments to FTB. All payments were made on time every quarter.

Information for Shirin Delshad:

Lives at 42335 Washington St., Apt 24, Palm Desert, CA 92211

Shirin is single and has no dependents.

Shirin made $20,350 in federal estimated payments and another $4,000 to the FTB. All payments were made on time every quarter.

According to the partnership agreement Ramona has a 40% capital and profits interest, Ross has 20% capital and profits interest, and Shirin has the remaining 40% capital and profits interest. Ramona and Shirin are both active in the business but Ross is not. The partnership has been in operation with the same owners since January 1, 2010. Shirin and the Kazemi family are not related.

The partnership values its inventory using the accrual method and did not have any changes in methods in the current year. Purchases for the year were $157,418.

Cash distributions to partners:

Ramona......	$54,399.60
Ross...........	$27,199.80
Shirin..........	$54,399.60

You will need the following financial statements to complete this partnership return.

	Horse & Carriage Animal Feed Store
	Income Statement
	Year Ended December 31, 2012
Sales			$460,000
Cost of Goods Sold		161,692
			298,308
Expenses:
Salaries and Wages		48,182
Guarantee Payments
Ramona	20,000
Ross	10,000
Shirin	20,000	50,000
Accounting		4,200
Advertising		15,316
Bad Debts		2,860
Bank charges		280
Depreciation		15,447
Employee Benefit Programs		4,800
Freight out		3,250
Insurance		2,440
Legal and professional fees		1,800
Meals and entertainment (at 50%)		680
Office Supplies		490
Property Taxes		2,000
Taxes and Licenses		4,890
Utilities		5,270
Other Business deductions		404
Total Expenses			162,309
Net Income (Loss)			$135,999
			======

	Horse & Carriage Animal Feed Store
	Balance Sheet
	As of December 31, 2012
ASSETS
Current Assets:
Cash				345,821
Accounts receivable, net				7,000
Inventory				5,726
Office supplies on hand				300
Total Current Assets				358,847
Long-Lived Assets:
Land			60,000
Building		250,000
Less accum. depreciation		(23,481)	226,519
Machinery & equipment		40,000
Less accum. depreciation		(26,987)	13,013
Total Long-lived Assets				299,532
Total Assets				$658,379
				=====
LIABILITIES
Current Liabilities:
Accounts Payable				4,200
Notes Payable				15,000
Interest Payable				1,000
Wages Payable				800
Total Current Liabilities				21,000
Long-Tem Liabilities:
Mortgage Payable			130,000
Total Long-Term Liabilities				130,000
Total Liabilities				151,000
PARTNERS' CAPITAL
Ramona, Capital			202,951.60
Ross, Capital			101,475.80
Shirin, Capital			202,951.60
Total Partners' Capital				507,379
Total Liabilities & Owner's Equity				$658,379
				======

	Horse & Carriage Animal Feed Store
	Balance Sheet
	As of December 31, 2011
ASSETS
Current Assets:
Cash				350,000
Accounts receivable, net				7,000
Inventory				10,000
Office supplies on hand				300
Total Current Assets				367,300
Long-Lived Assets:
Land			60,000
Building		250,000
Less accum. depreciation		(19,478)	230,522
Machinery & equipment		40,000
Less accum. depreciation		(15,543)	24,457
Total Long-lived Assets				314,979
Total Assets				$682,279
				=====
LIABILITIES
Current Liabilities:
Accounts Payable				3,800
Notes Payable				15,000
Interest Payable				1,000
Wages Payable				1,100
Total Current Liabilities				20,900
Long-Tem Liabilities:
Mortgage Payable			154,000
Total Long-Term Liabilities				154,000
Total Liabilities				174,900
PARTNERS' CAPITAL
Ramona, Capital			202,951.60
Ross, Capital			101,475.80
Shirin, Capital			202,951.60
Total Partners' Capital				507,379
Total Liabilities & Owner's Equity				$682,279
				======

Partnership Return filing situation 2:

The Saul's Landscaping Arts (EIN 72-3456780) is a partnership between Saul Lopez (SSN 602-34-5670) and Erick Garcia (SSN 532-34-5678) that specialize in garden landscaping arts. The partnership's address is 8200 Stockdale Hwy, Ste M, Bakersfield, CA 93311. Saul has has 50% capital and profits interest and Erick has 50% capital and profits interest. They started business January 1, 2012. Both Saul and Erick were active in the business. They are operating under the cash method of accounting.

Depreciation expense is for a power lawnmower placed in service when they started business on January 1, 2012 (5 year property).

Saul is married to Conchita Perez (SSN 550-12-3454). They live at 4725 Panama Lane, Bakersfield, CA 93313.

They have three children:

Name:	Social Security Number	Date of Birth
Rosa Lopez	612-34-5678	August 1, 2011
Claudia Lopez	625-67-5901	September 30, 2010
Lucrecia Lopez	621-23-4567	March 3, 2005

In addition to the partnership income, Saul received the following Form W-2:

Erick lives with his girlfriend but he is not married. They have a child together, whom Erick totally supports. Juan Garcia (SSN 627-89-1011 DOB June 6, 2012). Their address 4208 Rosedale Ave, Apt 39, Bakersfield, CA 93308. Erick is 26 years old.

You will need the following financial statements to complete this partnership return.

	Saul's Landscaping Arts
	Income Statement
	Year Ended December 31, 2012
Revenues:
Landscaping Fees		40,075
Finance charge income		100
Total Revenue			40,175
Expenses:
Repairs and Maintenance		2,200
Rent		6,000
Taxes and Licenses		600
Bank charges		204
Depreciation		1,658
Insurance		849
Legal and professional fees		600
Office Supplies		490
Property Taxes		140
Utilities		5,270
Total Expenses			18,011
Net Income (Loss)			$22,164
			======

	Saul's Landscaping Arts
	Balance Sheet
	As of December 31, 2012
ASSETS
Current Assets:
Cash				52,432
Accounts receivable, net				4,350
Total Current Assets				56,782
Long-Lived Assets:
Machinery & equipment		8,290
Less accum. depreciation		(1,658)	6,632
Total Long-lived Assets				6,632
Total Assets				$63,414
				=====
LIABILITIES
Current Liabilities:
Accounts Payable				750
Notes Payable				1,500
Total Current Liabilities				2,250
Long-Tem Liabilities:
Loan Payable			9,000
Total Long-Term Liabilities				9,000
Total Liabilities				11,250

PARTNERS' CAPITAL
Saul, Capital			26,082
Erick, Capital			26,082
Total Partners' Capital				52,164
Total Liabilities & Owner's Equity				$63,414
				======

	Saul's Landscaping Arts
	Statement of Partner's Equity
	December 31, 2012
		Saul Lopez	Erick Garcia	Total
		Capital	Capital	Capital
Partner Capital January 1, 2012		$25,000	$25,000	$50,000
Year-to-date net income		11,082	11,082	22,164
Partner draws		(10,000)	(10,000)	20,000
Partner Capital December 31, 2012		26,082	26,082	52,164
		=====	=====	=====

Answer the following questions as accurate as possible. Please pay attention to your answers as they will appear again on the "Quiz Online" part of this topic. Prepare your answers for these questions and then click on "Assignment" online in step 3 above when you are ready to submit them.

1. Look at the Form 1065 you prepared for the Horse and Carriage Partnership. What is the amount on Line 20?

A. $34,130
B. $162,309
C. $4,800
D. None of the above

2. Look at the Form 1065 you prepared for the Horse and Carriage Partnership. What is on Schedule B Line 3b?

A. No
B. Yes
C. None of the partners owned more than 50%.
D. Schedule B is not necessary.

3. Look at the Form 1065 you prepared for the Horse and Carriage Partnership. What is on Schedule B Line 6d?

A. No
B. Yes
C. The partnership is filing Schedule M3 instead.
D. Schedule B is not necessary.

4. Look at the Form 1065 you prepared for the Horse and Carriage Partnership. What amount is on Schedule K Line 1?

A. $185,999
B. $27,000
C. $135,999
D. None of the above

5. Look at the Form 1065 you prepared for the Horse and Carriage Partnership. What amount is on Schedule K Line 14a?

A. $185,999
B. $29,237
C. $135,999
D. None of the above

6. Look at the Form 1065 you prepared for the Horse and Carriage Partnership. What names did you enter on Schedule B-1 Part II for Individuals or Estates Owning 50% or More of the Partnership?

A. Ramona
B. Shirin
C. Ramona and Ross
D. None of the individuals owned more than 50%.

7. Look at the Form 1065 you prepared for the Horse and Carriage Partnership. What amount is on Form 4562 Line 17?

A. $0
B. $15,447
C. $35,021
D. There is no such form for a partnership.

8. Look at the Form 1065 you prepared for the Horse and Carriage Partnership. What amount is on Form 1125-A Line 6?

A. $10,000
B. $157,418
C. $167,418
D. Form 1125-A is not required.

9. Look at the Form 1065 you prepared for the Horse and Carriage Partnership. What amount is on Ross Kazemi's Schedule K-1 Line 14?

A. $27,200
B. $10,000
C. $37,200
D. None of the above

10. Look at the Schedule E (Form 1040) you prepared for Shirin. What is the amount on Line 41?

A. $74,400
B. $20,000
C. $139,999
D. None of the above

11. Look at the Schedule SE (Form 1040) you prepared for Shirin. What is the amount on Line 5?

A. $9,138
B. $8,315
C. $68,708
D. None of the above

12. Look at the Schedule SE (Form 1040) you prepared for Shirin. What is the amount on Line 6?

A. $1,000
B. $5,256
C. $8,000
D. $9,138

13. Look at the Form 1040 you prepared for Shirin. What is the amount on Line 36?

A. $74,400
B. $5,256
C. $69,144
D. None of the above

14. Look at the Form 1040 you prepared for Shirin. What is the amount on Line 37?

A. $74,400
B. $20,000
C. $54,400
D. $69,144

15. Look at the Form 1040 you prepared for Shirin. What is the amount on Line 55?

A. $10,874
B. $9,138
C. $20,012
D. $20,350

16. Look at the Form 1040 you prepared for Shirin. What is the amount on Line 56?

A. $10,874
B. $9,138
C. $20,012
D. $20,350

17. Look at the Form 1040 you prepared for Shirin. What is the amount on Line 73?

A. $1,900
B. $171
C. $338
D. None of the above.

18. Look at the Form 1065 you prepared for Saul's Landscaping Arts Partnership. What is the amount on Line 8?

A. $40,075
B. $40,175
C. $22,164
D. None of the above.

19. Look at the Form 1065 you prepared for Saul's Landscaping Arts Partnership. What is the amount on Line 14?

A. $740
B. $140
C. $600
D. None of the above.

20. Look at the Form 1065 you prepared for Saul's Landscaping Arts Partnership. What is the amount on Line 16c?

A. $871
B. $1,658
C. $2,553
D. None of the above.

21. Look at the Form 1065 you prepared for Saul's Landscaping Arts Partnership. What is the amount on Line 20?

A. $2,612
B. $3,100
C. $7,413
D. $0

22. Look at the Form 1065 you prepared for Saul's Landscaping Arts Partnership. What is the amount on Line 22?

A. $22,164
B. $18,011
C. $2,612
D. None of the above.

23. Look at the Form 1065 you prepared for Saul's Landscaping Arts Partnership. What is the amount on Schedule B Line 3b?

A. No
B. Yes
C. Nothing.
D. Schedule B is not required.

24. Look at the Form 1065 you prepared for Saul's Landscaping Arts Partnership. What is the amount on Schedule B Line 6d?

A. No
B. Yes
C. Nothing.
D. Schedule B is not required.

25. Look at the Form 1065 you prepared for Saul's Landscaping Arts Partnership. What is the amount on Schedule K Line 1?

A. $22,164
B. $55,924
C. $11,082
D. None of the above

26. Look at the Form 1065 you prepared for Saul's Landscaping Arts Partnership. What is the amount on Schedule K Line 4?

A. $22,164
B. $11,082
C. $7,129
D. $0

27. Look at the Form 1065 you prepared for Saul's Landscaping Arts Partnership. What is the amount on Schedule K Line 14a?

A. $22,164
B. $26,118
C. $19,558
D. None of the above

28. Look at the Form 1065 you prepared for Saul's Landscaping Arts Partnership. What is the amount on Analysis of Net Income (Loss) line 1?

A. $22,164
B. $3,992
C. $12,396
D. $0

29. Look at the Form 1065 you prepared for Saul's Landscaping Arts Partnership. What is the amount on Analysis of Net Income (Loss) line 2a(ii)?

A. $22,164
B. $26,143
C. $19,875
D. None of the above

30. Look at the Form 1065 you prepared for Saul's Landscaping Arts Partnership. What is the amount on Schedule L Line 14?

A. $63,414
B. $52,164
C. $52,432
D. Schedule L is not required.

31. Look at the Form 1065 you prepared for Saul's Landscaping Arts Partnership. What is the amount on Schedule M-1 Line 9?

A. $22,164
B. $9,840
C. $13,846
D. Schedule M-1 is not required.

32. Look at the Form 1065 you prepared for Saul's Landscaping Arts Partnership. What is the amount on Schedule M-2 Line 9?

A. $52,164
B. $22,164
C. $20,000
D. Schedule M-2 is not required.

33. Look at the Form 4562 you prepared for Saul's Landscaping Arts Partnership. What is the amount on Line 19b(g)?

A. $1,658
B. $8,290
C. $6,632
D. None of the above

34. Look at the Form 4562 you prepared for Saul's Landscaping Arts Partnership. What is the amount on Line 22?

A. $1,658
B. $8,290
C. $6,632
D. None of the above

35. Look at the Form 1065 you prepared for Saul's Landscaping Arts Partnership. What is the amount on Saul's Schedule K-1 Line 11?

A. $22,164
B. $11,082
C. $25,000
D. None of the above

36. Look at the Form 1065 you prepared for Saul's Landscaping Arts Partnership. What is the amount on Saul's Schedule K-1 Line 4?