Jet stream income

Sheet1
Assignment: Preparation of Form 1065 Page 1, Schedule K and K-1
Jet Stream LLC
FACTS RELATED TO 2014:
- Jet Stream filed for LLC status on October 27, 2013 and started generating revenue mid 2014.
- The $5,000 of organizational expenses were incurred during 2014 and were incident to the creation of the partnership.
- Of the total interest income $1,500 comes from tax exempt bonds and the remainder is taxable.
- The gain from the sale of fixed assets qualifies as IRC Section 1231 gain.
- The total dividends are from domestic companies. Jet Stream has held the stock since November 2013.
- Seth is a 30% service partner acting as Jet's Stream's Director of Marketing. He receives $95,000 for the services he provides to Jet Stream.
- Seth's taxable year end is December 31st.
- Gwen, the President of Jet Stream owns the remaining 70%. Gwen's taxable year end is December 31st.
- Jet Stream does not have a compelling business purpose for a fiscal year end.
REQUIREMENTS:
- A blank form 1065 page one, Schedule K and Schedule K-1 are posted in this module under the assignment section.
- Complete these by hand OR you may use the IRS editable forms if you know how.
- You MUST submit Form 1065, Schedule K and Schedule K-1 in PDF format.
- You MAY submit supporting calculations using PDF format. If you preform your calculations in excel make sure to show them before converting your document to PDF because once converted I will not be able to review formulas. Be sure to format these before submitting to me. This means I should be able to view each page independently.
1.) Complete page one of Form 1065 as follows:
- Name of Partnership
- Lines 1 - 22 if applicable.
- If you group items on one line just indicate this by writing in the expense titles and amounts grouped
- Do NOT complete page two, three or five of Form 1065.
2.) Complete Schedule K
- All applicable lines
- Ignore line 14a.
3.) Complete Schedule K-1 for Seth ONLY
- Box B, F and J
- Lines 1 - 20 if applicable. Indicate the description of the item in box 18 if applicable.
- Ignore line 14
4.) Indicate what Jet Stream's required tax year must be and why.
5.) Indicate whether the organization expenses are currently deductible and why or why not. Cite the applicable Code Section and rules if applicable.
HINTS:
1.) Total Partnership net income = $1,361,240.
2.) Guaranteed Payments are generally not allocated in the same manner as ordinary or separately stated items.
3.) Ignore self employment income (lines 14a on Schedule K and line 14 on Schedule K-1).
4.) Ordinary income = $1,359,140
Final Trial Balance for Jet Stream LLC for 2014:
Debit Credit
Cash 148,020.00
Accounts Receivable 254,000.00
Inventory 600,400.00
Property, Plant & Equipment 1,500,820.00
Accumulated Depreciation (684,000.00)
Prepaid Assets 25,000.00
Accounts Payable 89,000.00
Accrued Liabilities 134,000.00
Notes Payable 200,000.00
Partner's Capital 150,000.00
Current Year cash Distributions (90,000.00)
Sales Revenue 3,897,450.00
Scrap Metal Sales 532,920.00
Interest Income 5,500.00
Gain on Fixed Assets 3,400.00
Dividend Income 9,100.00
Loss on Long-tem stock (4,100.00)
Cost of Goods Sold 1,898,730.00
Salaries and Wages 85,000.00
Guaranteed Payments to Service Partners 400,000.00
Charitable Contributions 11,000.00
Repairs and Maintenance 2,000.00
Depreciation Expense 650,000.00
Rent Expense 28,000.00
Organizational Expenses 5,000.00
Meals & Entertainment (50% non-deductible for tax) 1,600.00
Sales Tax Expense 1,700.00
4,927,270.00 4,927,270.00
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