Partnership tax return. Prepare the 2017 partnership tax return, include the additional schedules and forms as needed. Be sure to prepare a Schedule K-1 for each partner. Project information attached.

Partnership tax return. Prepare the 2017 partnership tax return, include the additional schedules and forms as needed. Be sure to prepare a Schedule K-1 for each partner. Project information attached.
ACCT 441 – Advanced Tax Partnership Tax Return Wayne Company is located at 90 Fifth Avenue New York City, NY . The company is a general partnership using the calendar year and accrual basis for both book and tax purposes. It engages in the development and sale of specialized self -protection armor. The employer identification number (EIN) is 99 -9999999. The company formed and began business on January 1, 201 6. It has not foreign partners orother foreign dealing s. The company is neither a tax shelter or a publicly traded partnership. The company has made no distribution other than cash and no changes in ownership have occurred during the current year. Diana Banner is the Tax Matters Partner. The partnership m akes no special elections. Information on Partnership Formation: Two individuals formed the partnership on January 1, 201 6: Diana Banner (2500 Island Way, New York City, NY) and Bruce Parker (890 Arachnid Drive, New York City, NY). For a 30% interest, Banner contributed $600,000 cash. She is an active general partner who manages the company. For a 70% interest, Parker contributed $1.16 million cash and 1,000 shares of Metro Corporation stock having a FMV of $240,000 at the time of contribution and a b asis of $48,000 when originally acquired on January 2, 2014 . Parker is an active general partner who de signs and develops new products. For book purposes, the company recorded the contribution of stock at FMV. Inventory and COGS The company uses the perio dic inventory method and prices its inventory using the lower of FIFO cost or market. Only beginning inventory, ending inventory, and purchases should be reflected in Schedule A. No other costs or expenses are allocated to cost of goods sold. The corpora tion is exempt from the uniform capitalization (UNICAP) rules because average gross income for the previous three years was less than $10 million. The following information should also be included on the applicable form: Line 9 (a) Check (ii) (b),(c) , & (d) Not applicable (e) & (f) No Capital Gains and Losses: The company sold all 1,00 shares of Metro Corporation stock on Jul y 2, 2017 for $720,000. Fixed Assets and Depreciation: The company acquired the equipment on January 2, 2016 and placed it in service on that date. The equipment, which originally cost $1 million, is MACRS seven -year property. The company did not elect Sec. 179 expensing in the acquisition year and elected out of bonus depreciation. The company claimed the following depreci ation on this property: Year Book & Reg Tax Deprec. AMT Depreciation 2016 $ 142,900 $ 107,100 2017 244,900 191,300 On March 1, 2017 the company acquired and placed in service additional equipment costing $400,000. The company made the Sec. 179 expensing election for the entire cost of this new equipment. No depreciation or expensing is reported on Schedule A. The balance sheet is follows: January 1, 207 December 31, 2017 Account Debit Credit Debit Credit Cash $ 233,500 $ 143,450 Accounts Receivable 540,000 600,000 Inventory 1,000,000 1,200,000 Investment in corporate stock 240,000 40,000 Investment in municpal bonds 40,000 0 Equipment 1,000,000 1,400,000 Accum. Depreciation – Equipment 142,900 787,800 Accounts payable 100,000 130,000 Notes payable (short -term) 750,000 150,000 Accrued payroll taxes 3,500 5,250 Capital account balances: Diana Banner (30%) 617,130 693,120 Bruce Parker (70%) 1,439,970 1,617,280 Total $ 3,053,500 $ 3 ,053,500 $ 3,383,450 $ 3,383,450 The book income statement is as follows: Sales $ 5,000,000 Returns (250,000) Net sales $ 4,750,000 Beginning inventory $ 1,000,000 Purchases 2,000,000 Ending Inventory (1,200,000) Cost of goods sold $ (1,800,000) Gross profit $ 2,950,000 Expenses: Depreciation $ 644,900 Repairs 32,500 Insurance 35,000 Guaranteed payment (Banner) 100,000 Other salaries 700,000 Travel 20,000 Utilities 60,000 Rent Expense 150,000 Advertising 30,000 Legal and accounting fees 50,000 Charitable contributions 40,000 Payroll taxes 70,000 Business interest expense 36,000 Investment Expenses 3,600 Investment Interst Expense 4,500 Meals and entertainment 15,000 Total expenses $ (1,991,500) Gain on Sale of equipment Interest on municpal bonds 1,600 Net gain on stock sales 480,000 Dividend income 13,200 Net income $ 1,453,300 Other information: • The company paid Banner a $100,000 guaranteed payment for her management services. • The company a $40,000 cash contribution to the Boys and Girls Club on December 1 of the current year. • During the current year, the company made a $360,000 cash distribution to Banner and a $840,000 cash distribution to Parker. • The municipal bonds, acquired in 2016, are general revenue bonds, not private – equity bonds. Assume that no expenses of the company are allocable to the tax – exempt interest generated from the municipal bonds. • Use book umbers for Schedule L, M -2, and Line 1 of Schedule M -1. Also use book numbers for Item L of Sched ule K -1, and check the box for Sec. 704(c) book. • The partners share liabilities, which are recourse, in the same proportion as their ownership percentages. Required: Prepare the 2017 partnership tax return, include the additional schedules and forms as needed. Be sure to prepare a Schedule K -1 for each partner. At January 1, 2017 Banner’s basis was $873,180 and Parker’s was $1,845,420.