Partnership Tax Return Information:
Using the information provided below, complete Bent Creek Dental’s Form 1065 and Schedule D. Also complete Josh Mathis and Mary Margaret Mathis’s Schedule K-1.
Form 4562 for depreciation is not required. Use the amount of tax depreciation and sec. 179 expense provided in the income statement and the information in #4 below to complete the appropriate lines on the first page of Schedule K of Form 1065.
Form 4797 for the sale of trade or business property is not required. Use the amount of gain and loss from the sale of the computers and furniture in the income statement and the information provided in #4 and #5 below to complete the appropriate lines on the first page of Schedule K of Form 1065.
If any information is missing, use reasonable assumptions to fill in any gaps.
The forms, schedules, and instructions can be found at the IRS website (www.irs.gov). The instructions can be helpful in completing the forms.
On January 1, 2009, two enterprising dentists in the community, Josh Mathis and Mary Margaret Mathis, anticipated a boom in the local dental industry. They decided to sell their small businesses and pool their resources as general partners in establishing a dental office. Their general partnership was officially formed under the name Bent Creek Dental and soon became a thriving business.
BCD is located at 2311 Bent Creek Rd, Ste 500, Auburn, AL 36830
BCD’s Employer Identification Number is 91-3697984.
BCD’s business activity is dentistry. Its business activity code is 621210.
Both general partners are active in the management of BCD.
Josh Mathis’s social security number is 500-23-4976.
Josh’s address is 31 W. Oak Drive, Auburn, AL 36830
Mary Margaret Mathis’s social security number is 374-68-3842.
Mary Margaret’s address is 947 E. Linder Street, Auburn, AL 36830
BCD uses the accrual method of accounting and has a calendar year-end.
The following is BCD’s 2019 income statement:
|BCD Income Statement|
|For the year ended December 31, 2019|
|Sales (on account)||$600,000|
|Less: Sales Returns||-20,000|
|Cost of goods sold||-160,000|
|Gross profit on sales||$420,000|
|Salaries and wages|
|Depreciation and 179 expense||43,335|
|Bad debt expense||4550|
|Net operating income||$260,535|
|Gain on sale of securities||$250|
|Gain on sale of computers||16,700|
|Interest on mortgage||$6,600|
|Interest on notes payable||3,250|
|Life insurance premiums||3,500|
|Loss on sale of office furniture||555||$19,105|
Josh Mathis $32,000
Mary Margaret Mathis $18,000
QRS (qualified) $300
JKL, Ltd. (not qualified) 195
Interest on Alabama municipal bonds $3,600
Interest on savings 660
Interest on accounts receivable 400
Mary Margaret $49,112
The following are BCD’s balance sheets as of Janaury 1, 2019 and December 31, 2019:
|BCD Balance Sheets|
|Investment in municipal bonds||50,000||50,000|
|Investment in QRS common stock||42,500||50,000|
|Less: Accum. Depr.||13,649|
|Less: Accum. Depr.||60,697||7,303||34,376||15,624|
|Less: Accum. Depr.||39,874||80,126||36,798||83,202|
|Liabilities and capital|
|Mary Margaret Mathis||307,042||171,679|
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