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(Solved by Expert Tutors) Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the


Deanne each contributed $120,000 in cash and Keon transferred five acres of undeveloped land to the partnership. The land had a tax basis of $70,000 and was appraised at $180,000. The land was also encumbered with a $60,000 nonrecourse mortgage for which no one was personally liable. All three partners agreed to split profits and losses equally. At the end of the first year Blue Bell made a $7,000 principal payment on the mortgage. For the first year of operations, the partnership records disclosed the following information:Sales revenue $620,000Cost of goods sold $420,000Operating expenses [Other Deductions] $90,000Long-term capital gains $2,400Section 1231 gains $300Charitable contributions $2,100Municipal bond interest $900Salary paid as a guaranteed payment to Deanne (not included in expenses) $30,000In September, Aaron?s daughter was married. Aaron received a cash distribution of $17,000 from the partnership on September 2. Deanne and Keon each received a cash distribution from the partnership of $10,000 on December 3.On the partner?s K-1, compute the partner?s basis in the partnership at the end of the year. You may access the Form 1065 on the IRS website [irs.gov] and use Adobe to enter data in the return. You should submit the printed copy of Form 1065 including the Schedule K, and three Schedule K-1s, one of each partner.

 

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