View the step-by-step solution to:

FACTS Viola Holloway and Renee Forrow are the sole equal partners in the general partnership of Holloway And Forrow Enterprises.

FACTS

Viola Holloway and Renee Forrow are the sole equal partners in the general partnership of Holloway And Forrow Enterprises. The partnership, which is a retail office supplies and stationery store, began its operations on January 2, 1985. For Federal Income Tax purposes, the partnership is a calendar year taxpayer and uses the Accrual Method Of Accounting. Its Employer Identification Number is 76-1234567, address is 17302 East Meadow Bird Circle Houston, Texas 77086-1747, telephone number is (281) 437-6211, fax number is (281) 536-1908 and E-Mail address is "hollowayandforrowenterprises.com". The business activity code for the partnership is 451140. Both partners devote one hundred percent (100%) of their time to the business of the partnership and are equal partners of the partnership in every respect (ie. profit sharing ratio, loss sharing ratio, ownership, etc.). Viola Holloway, who is the designated Tax Matters Partner for the partnership, has social security number of 678-90-1234, her address is 1953 Beverly Lane Houston, Texas 77064-3218 and her telephone number is (832) 469-3614. Renee Forrow has social security number of 789-01-2345, her address is 1606 Natalie Court Houston, Texas 77089-4637 and her telephone number is (832) 948-3126.

FINANCIAL INFORMATION

During the year of 2017, the Holloway And Forrow Enterprises reported the following Income and Expenses (including necessary accruals) for Financial Accounting purposes:

Gross Receipts $1,482,000

Sales Returns And Allowances       109,000

Purchases    510,000

Dividends Received From Stock (Not Qualified Dividends)

Investments In Less Than twenty percent (20%)

Owned United States (U. S.) Corporation    80,000

Interest Income:

Taxable Interest    18,000

Tax-Exempt Interest     7,200

Guaranteed Payments:  Viola Holloway    75,000

(Services)   Renee Forrow        75,000

Salaries - Employees      108,000

Repairs And Maintenance    19,300

Rent Expense - Office       84,000

Rent Expense - Equipment    15,500

Payroll Taxes (Federal And State)      19,600

Interest Expense (Trade Or Business Interest)    25,200

Advertising Expense    44,500

Charitable Contributions ("50%" Charities)      48,000

Legal And Professional Fees       28,800

Depreciation Expense    50,000 *

Utilities Expense    27,300

Employee's Health Insurance Premiums       14,200

Entertainment Of Clients     5,000

      Partners' Life Insurance Premiums       14,400 **


The Holloway And Forrow Enterprises owns the following depreciable assets:

ASSET DESCRIPTION    DATE ACQUIRED ORIGINAL COST

Automobile - 2016 Lexus 460    April 1, 2016    $ 50,000

(Five-year Property)

Automobile - 2016 Cadillac Seville   April 1, 2016     50,000

(Five-year Property)

Furniture And Fixtures              May 1, 2015    150,000

(Seven-year Property)

Each automobile was used a total of 18,000 miles during the year of 2017 all which were business miles. The automobiles were not available for personal use during off-duty hours and were used solely by Viola Holloway and Renee Forrow, who both have another vehicle available for personal use. For Federal Income Tax purposes, all of these assets are depreciated using the Modified Accelerated Cost Recovery System (MACRS). Section 179 Deduction was not elected in regards to any of these assets nor was Straight-Line Depreciation used.

BALANCE SHEETS

The Balance Sheets (Financial Accounting) for the Holloway And Forrow Enterprises at the beginning and ending of the year of 2017 are as follows:

ASSETS January 1  December 31

Cash   $ 36,000   $  84,000

Trade Notes And Accounts Receivable   96,000         90,000

Inventory (Valued At Cost) *  120,000     100,000

Marketable Securities - Long Term  140,000        250,000

Depreciable Assets (And Land)  260,000 **      260,000 **

Less: Accumulated Depreciation     (65,000)    (115,000)

Other Assets (Deposits)     12,000         12,000

       ------------   ------------

TOTAL ASSETS       $ 599,000   $ 681,000

   =======   =======

LIABILITIES AND PARTNERS' CAPITAL

Accounts Payable (Non Recourse) $  96,000    $ 116,200

Notes Payable - Short Term (Recourse)     24,600         24,000

Notes Payable - Long Term (Recourse)    164,000        212,000

Partner's Capital (Total)    314,400     328,800


TOTAL LIABILITIES AND        ------------    ------------

PARTNERS' CAPITAL           $ 599,000       $ 681,000

   =======    =======

*  - The rules of Section 263A of the Internal Revenue Code do not apply to the partnership.

** - Includes $10,000 allocated to Land.




REQUIRED

Prepare the Partnership Return for the Holloway And Forrow Enterprises for the year of 2017 and Schedule K-1 for both partners. The following Forms are needed to complete the Return:


Form 1065

Schedule B-1 (Form 1065)

Form 1125-A

Schedule K-1 (Form 1065) (2)

Form 4562

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question