Reference no: EM132462060

The KL Partnership is owned equally by Kayla and Lisa. At the beginning of the year. Kayla's basis is $20,000 and Lisa's basis is $16,000. Partnership debit did not change from the beginning to the end of the tax year. KL reported the following income and expenses for the current tax year.

Sales revenue                            $150,000

Cost of sales                             $80,000

Distribution to Lisa                     $15,000

Depreciation expense                 $20,000

Utilities                                    $14,000

Rent expense                            $18,000

Long-term capital gain                $6,000

Payment to Mercy Hospital for Kayla's medical expenses $12,000

Problem A. Using a Microsoft Excel spreadsheet, that could be used in a CPA firm to accumulate KL's information that would be reported on Form 1065, page 1 [Ordinary business income (loss)] and page 4 (Schedule K). Include calculations and subtotals to ensure the spreadsheet will automatically update if the information changes. how much is the partnership's ordinary income on page 1? What information is show on Schedule K?

Problem B. Use the information in part (a) to prepare Form 1065, pages 1 and 4 (Schedule K) for the KL Partnership. On page 1, omit items A to j at the top if the facts do not provide that information. For Schedule K, line 14, assume both partners are active in the partnership.

Problem C. Add columns to the spreadsheet to allocate amounts to Kayla and Lisa. (For this requirement, disregard the income from self-employment and information related to the qualified business income deduction.) Show the partner's allocation percentages at the top of their columns, and use those percentages in formulas to allocate any separately stated items that should be allocated. (note that some items are directly assigned to a partner.) What information will be shown on Kayla's and Lisa's Schedules K-1, Part III? What items will Kayla and Lisa report on their Federal income tax returns

Problem D. Expand the spreadsheet. Add rows for beginning basis and ending basis below Kayla's and Lia's columns, and calculate their ending basis in the partnership interests. how do you make this calculation? What is each partner's basis in her partnership interest at the end of the tax year?

Problem E. Completed Form 1065 Schedule M-1 and M-2 (please show all calculations) Assume that the beginning balance of the partner's capital account equals the beginning basis for the partner's.

Attachment:- Kl partnership.rar