Reference no: EM13369244

Adam Ant 421 Brickell Avenue # 1420 Miami, FL 33131 (SS #987-65-4321), Bob Builder 1111 Biscayne Boulevard Miami, FL 33131 (SS #876-54-3210) and Clark Carter 121 Ocean Drive Miami Beach, FL 33149 (SS #765-43-2109) formed the equal ABC Partnership on January 1, 2012.

Its employer identification number is 59-3456789.

Its address is 456 Brickell Avenue Miami, FL 33131.

ABC operates a computer retail store.

Bob is a computer genius and will be the brains behind the operation.

Adam and Bob each contributed cash of $120,000 and Clark contributed property worth $160,000 with a basis of $100,000 and subject to a mortgage of $40,000.

ABC is a cash basis taxpayer, although they use the accrual method for book purposes.

In this their first year of operations they had the following activity for tax purposes (cash basis):

Sales Revenue	$420,000
Purchases of inventory	175,000
Ending Inventory	45,000
Depreciation	30,000
Section 179 expenses	25,000
Salaries	42,000
Guaranteed payment to Bob	12,000
Purchases of equipment	152,000
Rent Expense	21,000
Interest Income	5,000
Mortgage interest expense	1,250
Dividend Income	1,000

Notes:
1. Depreciation for book purposes was $20,000 and $30,000 for tax purposes before taking §179 adjustment of $25,000.
2. The $5,000 of interest income is from an interest earning checking account.
3. ABC had bad debt accrual expense of $4,500 for book purposes, but no actual charge-offs during the year.
4. By year end they had billed $41,000 in revenue that was uncollected.

Required:

Prepare a form 1065 for ABC Partnership, including the Schedule K-1 for the partners and all other required schedules. Form 4562 for depreciation is not required.

If any information is missing make reasonable assumptions and attach a listing of those assumptions

Be sure to attach a group cover page if working in a group.