Partnership Workshop Return 1
Title:
Summary:
Partnership Workshop Return 1
In this lesson, you will learn the following:
1. Create Form 1065;
2. Complete Form 4562, Depreciation and Amortization with
multiple depreciation worksheets;
3. Complete Schedules K-1;
4. E-file this partnership return.
Steps for Partnership Workshop Return 1

Start a new return using 50-1XXXXXX. Use your company’s EFIN for
“XX-XXXX”.

John Jackson and Susan Lemmons have started a business named Scrolls for
Homes. The business address is 33 Woodlands Drive, Rome, GA, 30161. They
create and sell decorative scrolls for homes. They formed the partnership on
January 1 of this tax year and are filing the initial return for the partnership.
They are using the cash method of accounting, and are using the calendar year for
the business.
Gross receipts for the year were $8,093.
Items that were used in the business (at 100 % business use) are listed below. The
partnership will depreciate these items.
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
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Placed in
Description Service
Band Saw 01/01/20XX
Cost
$1,290
Wood
Planer
01/01/20XX
$406
Joiner
01/01/20XX
$499
Tools
07/01/20XX
$777
Drum
Sander
07/01/20XX
$801
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Prior
Prior
Recovery
Prior
AMT
Section
Method Convention Period Depreciation Depreciation 179
MACRS/
HY
7
200DB
MACRS/
HY
7
200DB
MACRS/
HY
7
200DB
MACRS/
HY
7
200DB
MACRS/
HY
7
200DB
Take Section 179 for the entire cost on the wood planer, joiner, tools, and drum
sander.
They want to take the 50% special depreciation allowance for the band saw.
Other expenses for the business are:
Rent ............................................$780
Taxes ..........................................$281
1
Partnership Workshop Return 1
Advertising and marketing .........$276
Professional education ...............$113
Bank charges and card fees ........$139
Dues and fees .............................$304
Office expenses ..........................$175
Subscriptions ................................$56
Professional fees ........................$650
Depreciation per the books ........$508
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

They did not have any inventory at the beginning or the end of the year.
Purchases less cost of items withdrawn for personal use were $732.
Other costs for inventory were:
1. Craft show fees .......$ 680
2. Freight and delivery ...$24
3. Supplies ....................$365


They use the cost method to value ending inventory.
The answer to questions 9e and 9f from Form 1125-A, Cost of Goods Sold, is
“No”.
The partnership is a domestic general partnership.
The answer to questions 2-18a on Form 1065 pages 2 and 3, Schedule B are all
“No” except question 3b is “Yes”. They would like for you to complete the
unnecessary schedules anyway.
Portfolio income is interest of $1,801.
Cash at the end of the year was $5,116.
John Jackson’s address is 550 West Street, Rome, GA 30165. His Social Security
number is 201-XX-XXXX.
Susan Lemmons’ address is: 887 Pecan Street, Rome, GA 30161. Her Social
Security number is 202-XX-XXXX.
They are both general domestic tax basis partners. They each made capital
contributions of $1,785.
They would like to have the basis for each of them computed.
The partnership’s return will be filed in Cincinnati.
They each owned 50% of the business all year.
They do want to electronically file the return.
John Jackson, the president, is signing the return. His PIN is 12345. He would like
for you to enter the PIN for him.
John’s e-mail address is jjackson@isp.com. His phone number is (706)555-3434.
The business telephone number is (706)555-1111.
He wants you to use the business telephone number on any forms that request a
telephone number.
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2
Partnership Workshop Return 2
Title:
Summary:
Partnership Workshop Return 2
In this lesson, you will learn the following:
1. Create Form 1065;
2. Complete End of Year Trial Balance Sheet;
3. Complete Schedules K-1;
4. Complete Form 8825, Partnership or S Corporation Rental
Real Estate Income;
5. Complete Form 4562, Depreciation and Amortization with
multiple depreciation worksheets;
6. Paper file this partnership return.
Steps for Partnership Workshop Return 2

Start a new return using 50-2XXXXXX. Use your company’s EFIN for
“XX-XXXX”.

Albert Gale and Allison Gale have formed a domestic general partnership for
commercial real estate and they are leasing buildings for income.
The name of the partnership is A & A Enterprises. A & A is located at 452
Redmond Road, Rome, GA 30165.
They formed the partnership on January 1, 1989.
They use the cash method of accounting. They use the calendar year for the
business.
The answers to all of the questions on Form 1065, pages 2 and 3, Schedule B, are
“No” except 3b.
Interest income received was $1,567.
Interest expense on investment debts was $319.
Balance Sheet (Schedule L) amounts are:
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





Beginning of the
year
Assets
Cash
Prepaid real estate taxes
Mortgage and real estate loans
Building and other assets
Less Accumulated depreciation
Land (Net of Amortization)
Other assets
Liabilities
Other Current liabilities (rent escrow)
Partners’ capital accounts

$25,281
$ 3,796
$ 8,781
$218,363
$121,815
$16,502
End of the year
$23,606
$3,665
$23,000
$1,350
$149,495
$1,350
Depreciation not charged against book income this year (For Schedule M-1) is
$2,967.
1
Partnership Workshop Return 2
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
The commercial real estate is located at:
877 Industrial Blvd.
Rome, GA 30165
Rental real estate income and expenses are:
Gross rents ......................$16,200
Insurance ...........................$1,523
Legal fees .............................$850
Repairs .................................$690

The items that are depreciated are used 100% for business.
Description
Placed in
Service
Building
11/03/1993
Improvements
06/01/1996
Roof
07/01/2008
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



Taxes ....................................$510
Water ......................................$19
Bank Charges .........................$19
Prior
Prior
Recovery
Prior
AMT
Section
Cost Method Convention Period Depreciation Depreciation 179
MACRS/
$165,796
MM
31.5
$100,665
$79,248
SL
MACRS/
$48,867
MM
39
$20,727
$20,208
SL
MACRS/
$3,700
MM
39
$423
$423
SL
Land value on the building is $16,502 which is not included in the building details
above.
Allison’s address is 632 Main Street, Rome, GA 30161. Albert’s address is 457
East Upton Avenue, Rome, GA 30161.
Allison and Albert are both domestic tax basis partners.
The partnership’s return will be filed at the Cincinnati service center.
Allison and Albert want their interest computed.
Name
Percent Social Security #
Beginning
Beginning Balance of
Type of
Capital
Partnership
Partner Distributions Account
Interest
Allison Gale
70
203-XX-XXXX General
Albert Gale
30
204-XX-XXXX General

$1,361
$104,647
$33,777
$44,848
$16,645
They do not want to electronically file this return.
2
Partnership Workshop Return 3
Title:
Summary:
Partnership Workshop Return 3
In this lesson, you will learn the following:
1. Create Form 1065;
2. Complete End of Year Trial Balance Sheet;
3. Complete Schedules K-1;
4. Complete Form 4562, Depreciation and Amortization with
amortization;
5. Paper file this partnership return.
Steps for Partnership Workshop Return 3

Start a new return using 50-3XXXXXX. Use your company’s EFIN for
“XX-XXXX”.

Eight friends have started a movie producing business, Timeless Movies. The
business was started on July 9, 2007, and the address is:
8777 Broad Street, Rome, GA 30165.
They are using the accrual method of accounting.
This is a domestic general partnership.
For Schedule B, questions 2 and 3b should be answered “Yes”. All other
questions should be answered “No”.
Ordinary dividend income received this year was $200. This is portfolio income.
The partnership had no other income for the year.
They did not have many expenses.
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Taxes and Licenses .................$1,589
Accounting .................................$925
Bank Charges .............................$138
Loan interest accrued ............$23,400



Accrued loan interest deducted on books but not paid or deducted on Form 1065
was $23,400.
The return will be filed before the due date.
There are two items listed below which are being amortized.
Placed in
Code
Recovery
Prior
Description
Service
Cost
Section Convention Period Amortization
Organizational
10/01/2009 $12,500
709
SL
5
$10,625
costs
Organizational
07/01/2008 $17,776
709
SL
5
$17,776
cost

Balance sheet per books beginning and end of tax year:
1
Partnership Workshop Return 3
Beginning of the year
Assets
Cash
Intangible assets
Accumulated amortization
Liabilities
Mortgage notes (1 year or less)
Other Current Liability
Partners’ Capital Accounts
Accounts payable



$8,157
$30,276
$24,123
$5,740
$465,000
$465,000
$23,400
$(450,690)
$35
The partners are listed by name and percentage of ownership. They are all general
partners, except for Brad and Jennifer Wilson and Jacob Hartnett, who are limited
partners. The Wilsons are a family limited partnership.
All partners are domestic and use tax basis. All liabilities are nonrecourse.
You may use the company address for each partner’s mailing address.
Partners’
Names
Ben Randall
Ted Jones
William Cage
Peter Smith
Anthony Cruise
Brad and
Jennifer Wilson
Helen Hunter
Jacob Hartnett
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
End of the year
SSN or EIN
205-XX-XXXX
206-XX-XXXX
207-XX-XXXX
208-XX-XXXX
209-XX-XXXX
21-0XXXXXX
211-XX-XXXX
212-XX-XXXX
Percentage
Ownership
1.0 %
.50 %
.50 %
.50 %
.67 %
Beginning
Capital
Account
$(4,507)
$(2,253)
$(2,253)
$(2,253)
$(3,020)
Beginning
Balance of
Partnership
Interest
$19,358
$12,099
$9,680
$9,680
$14,519
.33 %
95.50 %
$(1,487)
$(430,410)
$1,510
$394,432
$(4,507)
$19,358
1.0%
The partnership return will be filed at the Cincinnati service center.
This return should not be electronically filed.
2
Partnership Workshop Return 4
Title:
Summary:
Partnership Workshop Return 4
In this lesson, you will learn the following:
1. Create Form 1065;
2. Complete End of Year Trial Balance;
3. Complete Schedules K-1;
4. Complete Form 4562, Depreciation and Amortization with
multiple depreciation worksheets;
5. Prepare the Election Not to Claim Special Depreciation
statement;
6. Paper file this partnership return.
Steps for Partnership Workshop Return 4

Start a new return using 50-4XXXXXX. Use your company’s EFIN for
“XX-XXXX”.

A domestic limited partnership was formed on January 1, 1994 by five coworkers. The business is retail sales of CDs. They use the cash accounting method
and are using the calendar year. The business name and address is:
The CD Factory
1540 Main Street
Rome, GA 30165
Depreciable items are all used 100% business. (XX is the current year.). They do
not want to take any Section 179 deduction or special depreciation deduction.

Placed in
Description Service
Fully
01/01/1996
Depreciated
Cost
$39,228
CD Burner
07/01/2009
$12,312
Retail
Displays
07/01/2009
$10,343
Computer
01/31/2010
$1,999
01/31/2010
$1,039
09/11/2010
$1,776
09/30/2010
$1,500
01/01/2011
$13,906
Upgrade
Computer
Display
Cabinet
Display
Cabinet
Phone
System
Prior
Recovery
Prior
AMT
Method Convention Period Depreciation Depreciation
MACRS/
HY
7
$29,228
$29,228
200DB
MACRS/
HY
7
$9,565
$8,541
200DB
MACRS/
HY
5
$9,748
$9,481
200DB
MACRS/
HY
5
200DB
MACRS/
HY
5
200DB
MACRS/
HY
7
200DB
MACRS/
HY
7
200DB
MACRS/
HY
7
$7,825
$6,240
200DB
1
Prior
Section
179
$10,000
$1,999
$1,039
$1,776
$1,500
Partnership Workshop Return 4
Prior
Prior
Placed in
Recovery
Prior
AMT
Section
Description Service
Cost
Method Convention Period Depreciation Depreciation 179
Furniture &
MACRS/
07/01/2000 $2,205
HY
5
$2,205
$2,205
Fixtures
200DB
Furniture &
MACRS/
07/01/1997 $1,800
HY
7
$1,800
$1,800
Fixtures
200DB
Furniture &
MACRS/
07/01/2000
$750
HY
7
$750
$750
Fixtures
200DB
MACRS/
Computer 10/26/20XX $1,253
HY
5
200DB
MACRS/
Equipment 03/31/20XX $638
HY
7
200DB
CD
MACRS/
07/01/20XX $13,906
HY
7
Displayer
200DB
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
The partnership used the cost method to value inventory. The rules for section
263A do not apply, and there was no change in valuing inventories.
On the Schedule B, pages 2 and 3, all of the questions should be answered “no”.
Below is the end of year information for the business.
Assets:
Cash.............................................$19,160
Inventories...................................$33,370
Income:
Gross receipts or sales ...............$296,687
Returns .............................................$624
Interest................................................$69
Expense:
Purchases................$143,901 (inventory)
Other costs ....................$716 (inventory)
Advertising ..................................$51,437
Bank Charges ................................$2,746
Insurance .......................................$7,821
Miscellaneous ...............................$1,283
Rent Paid .....................................$18,600
Repairs and Maintenance .................$174
Guaranteed payments to partners $31,250
Travel ............................................$1,815
Utilities..........................................$4,014
Pager Service ..............................$12,626
Operating expenses .......................$4,664
2
Partnership Workshop Return 4
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Beginning of year:
Cash .....................................................$22,027
Inventories..............................................$66,123
Depreciable assets ..................................$86,858
Accumulated depreciation .....................$72,711
Accounts payable .....................................$9,361
Partners’ capital account ........................$92,936
Other increases .......................................$13,906
(Section 754 Adjust-enter on M-2 line 4)

The partnership will file Federal Form 1065 by the due date at the Cincinnati
Service Center.
The partners’ information is below and the partners are all using the business
address.
All partners are domestic GAAP partners and they do want their interest
computed.
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
Name
Percent Social Security #
Beginning
Beginning
Current
Balance of
Type of
Guaranteed Capital
Capital
Partnership
Partner Distributions Payments Account Contributions
Interest
Cathy
Smith
30
212-XX-XXXX Limited
$8,125
$27,881
$17,280
Mike
Horton
30
213-XX-XXXX Limited
$8,125
$27,881
$17,280
Roy
12.5 214-XX-XXXX General
Matthews
$3,750
$11,617
$7,200
$1,440
Pat York
2.5
215-XX-XXXX General
$0
$11,800
$2,323
Sarah
Thomas
25
216-XX-XXXX General
$1,700
$19,450
$23,234

$15,000
$14,400
The partnership does not want this return electronically filed.
3
Partnership Workshop Return 5
Title:
Summary:
Partnership Workshop Return 5
In this lesson, you will learn the following:
1. Create Form 1065;
2. Complete End of Year Trial Balance Sheet;
3. Complete Schedules K-1;
4. Complete 4562, Depreciation and Amortization with multiple
depreciation worksheets;
5. Paper file this return.
Steps for Partnership Workshop Return 5

Start a new return using 50-5XXXXXX. Use your company’s EFIN for
“XXXXXX.”

Eight friends have started doing medical research for hospitals on CDs. They
formed a domestic limited liability company on July 1, 2008.
The name and address of the business is:
Medical MD Research
1585 Medical Blvd.
Rome, GA 30165
The business uses the cash method of accounting.
The rules of section 263A do not apply to the partnership, and there was no
change in valuing opening and closing inventories.
The answer to all of the questions on Schedule B is “No”.
The return will be filed by the due date. The partners do not want the return filed
electronically.
The partnership’s end of year information is below.
Assets
1. Cash ................................................$113,343
Income
1. Gross receipts or sales .....................$714,468
2. Other income .......................................$1,069
Liabilities
1. Mortgages (more than one year) ......$167,500
Expenses
1. Cost of labor (inventory) ...................$46,385
2. Salaries & wages .............................$434,498
3. Repairs .....................................................$82
4. Rent ...................................................$17,850
5. State franchise taxes ...............................$588
6. Accounting ..........................................$1,025
7. Advertising ..........................................$3,825
8. Bank charges .......................................$1,017
9. Dues ....................................................$5,433
10. Gifts.....................................................$4,935
11. Insurance ................................................$319
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1
Partnership Workshop Return 5
12. Legal fees ..........................................$62,879
13. Licenses...............................................$3,570
14. Meals reduce by 50% ..........................$7,282
15. Miscellaneous .....................................$8,756
16. Office expense ....................................$1,744
17. Postage ................................................$5,014
18. Supplies .............................................$12,004
19. Telephone ..........................................$11,839
20. Travel ................................................$29,727
21. Utilities................................................$3,562
22. Equipment rental ....................................$250

Depreciable items are listed below. For “XX”, use the current tax year. The
partnership would like to elect the Section 179 deduction for the full cost of
these assets.
Placed in
Description Service
Cost
Computer 07/01/20XX
$4,163
Computer 08/01/20XX
$2,277

Prior
Prior
Recovery
Prior
AMT
Section
Method Convention Period Depreciation Depreciation 179
MACRS/
HY
5
200DB
MACRS/
HY
5
200DB
The following is the beginning of year information.
Amount
Assets
Cash
Liabilities
Mortgage notes payable in 1 year
Partners’ capital accounts
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
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

$41,830
$142,500
$(100,670)
Use the business address for the partners.
The partnership return will be mailed to Cincinnati.
All partners are limited liability company tax basis members.
All partners would like their interest computed.
The partners’ information is below.
Partners’ Names
Joseph Collins
Type
General
SSN
217-XX-XXXX
Beginning
Capital
Account
$(40,268)
Percentage
39.471 %
Beginning
Balance of
Partnership
Interest
$5,711
2
Partnership Workshop Return 5
Jack Booth
James Williams
John Martin
Jerry Washington
Jennifer Holcomb
Jesse Alvarez
Janice Gold
General
Limited
Limited
Limited
Limited
Limited
Limited
218-XX-XXXX
219-XX-XXXX
220-XX-XXXX
221-XX-XXXX
222-XX-XXXX
223-XX-XXXX
224-XX-XXXX
$(40,268)
$(15,101)
$(2,013)
$(503)
$(1,510)
$(1,007)
$0
39.471 %
14.802 %
1.974 %
0.493 %
1.480 %
0.987 %
1.322 %
$5,711
$3,001
$998
$423
$781
$399
$634
3