Funky Chicken General Partnership
Income Statement (Per Books)
For Year Ended 12/31/15
| Sales Revenue |
|
$ 14,000,000 |
| COGS |
|
-8,000,000 |
| Gross Profit |
|
$ 6,000,000 |
|
|
|
| Operating Expenses: |
|
|
| Compensation |
$ 2,200,000 |
|
| Depreciation |
260,000 |
|
| Employment Taxes |
240,900 |
|
| Bad Debt Expense |
50,000 |
|
| Interest |
129,000 |
|
| Rent Expense - Building |
36,000 |
|
| Warranty Expense |
150,000 |
|
| Meals & Entertainment |
45,000 |
|
| Repairs & Maintenance |
237,000 |
|
| Fines & Penalties |
60,000 |
|
| Charitable Contributions |
300,000 |
|
| Other Business Expenses |
75,000 |
|
|
|
(3,782,900) |
| Other Income (Losses): |
|
|
| Interest Received on State of Nevada Bonds |
3,000 |
|
| Dividends Received from Coca-Cola |
9,000 |
|
| Capital Loss on Abercrombie Stock |
(18,000) |
|
| Gain on Sale of Equipment |
40,000 |
34,000 |
|
|
|
| Net Income |
|
$ - |
Additional Information:
1 For tax purposes, Funky Chicken always elects to Section 179 eligible property.
Funky Chicken does not have any Section 179 carryover to use.
For book purposes, Funcky Chicken uses straight-line depreciation.
On August 6, 2015, Funky Chicken purchased $46,000 of new office furniture.
On Sept. 25, 2015, Funky Chicken purchased $64,000 of equipment.
None of the depreciation is allocated to COGS (§263A).
2 Funky Chicken wrote off $40,000 in accounts receivable as uncollectible during the year.
3 Funky Chicken owns < 1% of the outstanding stock of Coca-Cola, Inc.
4 Other Business Expenses includes $2,500 for life insurance premiums on Priscilla Presley and Johnny Counterfeit for which Funky Chicken is the beneficiary.
5 Funky Chicken made cash distributions of $48,000 to Priscilla Presley and $112,000 to Johnny Counterfeit.
6 On July 21, 2015, Funky Chicken sold equipment used in its business for $120,000. It originally purchased the equipment on February 10, 2011 for $150,000.
The book depreciation through the date of sale was $70,000, while the tax depreciation was $150,000.
7 Compensation was paid by Funky Chicken as follows:
8 Interest Expense of $97,000 was incurred for working capital loans, while $32,000 while was incurred on debt used to purchase State of Nevada bonds.
9 Qualified production activities income (QPAI) equals $2,824,100. Employer's wages allocable to U.S. production activities equal $800,000.
10 On September 2, 2015, Funky Chicken sold 1,000 shares of Abercrombie stock for $52 per share. It purchased the Abercrombie stock May 4, 2013 for $70 per share.
11 Warranty expense is estimated as a % of sales. Actual claims and amounts paid on these warranties totaled $130,000.
13 Funky Chicken started business on June 1, 2007 and incurred $48,200 in organizational costs. Funky Chicken made the election to immediately expense $5,000 with the remainder over 180 months.
Prepare a partnership tax return
Requirements:
1 Prepare Pages 1-5 of Form 1065 (and any necessary supporting schedules).
2 Complete a K-1 for Priscilla.
3 Form 4562 for depreciation is not required.
4 Form 4797 is not required.
Attachment:- Funky Chicken Form.xlsx