Prepare a Form 1065 and appropriate schedules for AB Custom Saddles for tax year 2012 based upon the following facts:
AB Custom Saddles is a Domestic LLC formed on 1/1/2004. It has assets of $125,000. Employer
ID #41 678910. It is located at 1601 Mill Road, Windriver, MN 56300. Business code *1234567.
AB has two equal owners, Alan Anderson, SSN 555 00 2211, address: 1112 Broadway Ave., Minneapolis, MN 56011. Alan works full time for AB and is paid a guaranteed payment (salary) of $30,000 per year. His capital account and basis going into 2012 were both $10,000. And Bradley Bailey, SSN 470 31 0202, 1000 3rd St., Windom, MN 56011. He also has a basis and capital account of $10,000 going into 2012.
AB distributed $5,000 in cash, $2500 to each Alan and Bradley in 2012.
Business information:
Income from sales $175,000
Cost of goods sold 38,000
Rent expense 4,000
Telephone expense 2,000
Advertising 3,000
Salaries to non owners 27,000
Taxes (employees, personal prop) 2,400
Depreciation from previous years (Line 17 4562) 1,000
Repairs 1,000
AB sold stock (1221 assets) for $11,000 on 2/1/12 that was purchased on 2/1/04 for $7,000.
AB sold a machine that was fully depreciated (original cost $10,000 acquired 3/15/08) on 3/1/12 for $4,000.
AB bought and placed in service a used machine (7 year property) for $8,000 on June 1, 2012 and wants to expense the entire amount in 2012 if possible.
*Complete part L of the K 1 for each partner
References:
Text
Instructions Form 1065
Instructions Form 1065, Schedule K 1
Publication 541
Will need forms:
1065
1065 Schedule D
(2) 1065 Schedule K 1
4562
4797