November 2023 Comprehensive Problem 10 1 Emily Jackson Social SECURITY number 765 12 4326 and James Stewart Social SECURITY number

Comprehensive Problem 10-1

Emily Jackson (SocialSECURITY number 765-12-4326) and James Stewart (SocialSECURITY number 466-74-9932) are partners in a partnership that owns and operates a barber shop. The partnership’s first year of operation is 2014. Emily and James divide income and expenses equally. The partnership name is J&S Barbers, it is located at 1023 Broadway, New York, NY 10004, and its Federal ID number is 95-6767676. The 2014 financial statements for the partnership are presented below.

Emily lives at 456 E. 70th Street, New York, NY 10006, and James lives at 436 E. 63rd Street, New York, NY 10012.

Required:

Complete J&S Barbers’ Form 1065 and Emily and James’ Schedule K-1. Do not fill in Schedule D for the capital loss, Form 4562 for depreciation, or Schedule B-1 related to ownership of the partnership. Make realistic assumptions about any missing data. If an amount box does not require an entry or the answer is zero, enter “0”. If required, round your answers to nearest dollar.

Note: If required, enter a “loss” as a negative number on the tax form. Do not enter deductions as negative numbers. 

Department of the Treasury Internal Revenue Service U.S. Return of Partnership Income  For calendar year 2014, or tax year beginning _ _ _ _ , 2014, ending _ _ _ , 20_ _ _ .  ► Information about Form 1065 and its separate instructions is atwww.irs.gov/form1065. OMB No. 1545-0123 A Principal business activity Type or Print Name of partnership D Employer identification number   Barber Service J&S Barbers   95-676767 B Principal product or service Number, street, and room or suite no. If a P.O. box, see the instructions. E Date business started   Barber Service 1023 Broadway   1/01/14 C Business code number City or town, state or province, country, and ZIP or foreign postal code F Total assets (see the instructions)   812111 New York, NY 10004   $         20 Other information     A
I2 If this partner is a retirement plan (IRA/SEP/Keogh/etc.), check here ▢
J Partner’s share of profit, loss, and capital (see instructions):   Beginning Ending   Profit     20 Other information     A
I2 If this partner is a retirement plan (IRA/SEP/Keogh/etc.), check here ▢
J Partner’s share of profit, loss, and capital (see instructions):   Beginning Ending   Profit [removed] % [removed] %   Loss [removed] % [removed] %   Capital [removed] % [removed] %
K Partner’s share of liabilities at year end:   Nonrecourse . . . . . . . . . . . . . . . . . . $     Qualified nonrecourse financing . . . . $     Recourse . . . . . . . . . . . . . . . . . . . . . $ [removed]
L Partner’s capital account analysis:   Beginning capital account . . . . . . . . . $ [removed]      Capital contributed during the year $ [removed]      Current year increase (decrease) . . . $ [removed]      Withdrawals & distributions . . . . . . . . $ ( [removed] )   Ending capital account . . . . . . . . . . . . $ [removed]		*See attached statement for additional information.
☑ Tax basis ▢ GAAP ▢ Section 704(b) book   ▢ Other (explain)
M Did the partner contribute property with a built-in gain or loss?   ▢ Yes ☑ No       If “Yes,” attach statement (see instructions)

For Paperwork Reduction Act Notice, see Instructions for Form 1065.

IRS.gov/form1065

Cat. No. 11394R

Schedule K-1 (Form 1065) 2014

Schedule K-1 (Form 1065) 2014 Page 2 This list identifies the codes used on Schedule K-1 for all partners and provides summarized reporting information for partners who file Form 1040. For detailed reporting and filing information, see the separate Partner’s Instructions for Schedule K-1 and the instructions for your income tax return. 1. Ordinary business income (loss). Determine whether the income (loss) is passive or nonpassive and enter on your return as follows.   Report on   Passive loss See the Partner’s Instructions   Passive income Schedule E, line 28, column (g)   Nonpassive loss Schedule E, line 28, column (h)   Nonpassive income Schedule E, line 28, column (j)   2. Net rental real estate income (loss)   See the Partner’s Instructions   3. Other net rental income (loss)   Net income Schedule E, line 28, column (g)   Net loss See the Partner’s Instructions   4. Guaranteed payments Schedule E, line 28, column (j)   5. Interest income Form 1040, line 8a   6a. Ordinary dividends Form 1040, line 9a   6b. Qualified dividends Form 1040, line 9b   7. Royalties Schedule E, line 4   8. Net short-term capital gain (loss) Schedule D, line 5   9a. Net long-term capital gain (loss) Schedule D, line 12   9b. Collectibles (28%) gain (loss) 28% Rate Gain Worksheet, line 4 (Schedule D instructions)   9c. Unrecaptured section 1250 gain See the Partner’s Instructions   10. Net section 1231 gain (loss) See the Partner’s Instructions   11. Other income (loss)       Code       A Other portfolio income (loss) See the Partner’s Instructions     B Involuntary conversions See the Partner’s Instructions     C Sec. 1256 contracts & straddles Form 6781, line 1     D Mining exploration costs recapture See Pub. 535     E Cancellation of debt Form 1040, line 21 or Form 982     F Other income (loss) See the Partner’s Instructions   12. Section 179 deduction See the Partner’s Instructions   13. Other deductions       A Cash contributions (50%) See the Partner’s Instructions     B Cash contributions (30%)     C Noncash contributions (50%)     D Noncash contributions (30%)     E Capital gain property to a 50% organization (30%)     F Capital gain property (20%)     G Contributions (100%)     H Investment interest expense Form 4952, line 1     I Deductions–royalty income Schedule E, line 19     J Section 59(e)(2) expenditures See the Partner’s Instructions     K Deductions–portfolio (2%FLOOR) Schedule A, line 23     L Deductions–portfolio (other) Schedule A, line 28     M Amounts paid forMEDICAL INSURANCE Schedule A, line 1 or Form 1040, line 29     N Educational assistance benefits See the Partner’s Instructions     O Dependent care benefits Form 2441, line 12     P Preproductive period expenses See the Partner’s Instructions     Q Commercial revitalization deduction from rental real estate activities See Form 8582 instructions     R Pensions and IRAs See the Partner’s Instructions     S Reforestation expense deduction See the Partner’s Instructions     T Domestic production activities information See Form 8903 instructions     U Qualified production activities income Form 8903, line 7b     V Employer’s Form W-2 wages Form 8903, line 17     W Other deductions See the Partner’s Instructions   14. Self-employmentEARNINGS (loss)   Note. If you have a section 179 deduction or any partner-level deductions, See the Partner’s Instructions before completing Schedule SE.     A Net earnings (loss) from self-employment   Schedule SE, Section A or B     B Gross farming or fishing income   See the Partner’s Instructions     C Gross non-farm income   See the Partner’s Instructions   15. Credits     A Low-income housing credit (section 42(j)(5)) from pre-2008 buildings See the Partner’s Instructions     B Low-income housing credit (other) from pre-2008 buildings     C Low-income housing credit (section 42(j)(5)) from post-2007 buildings     D Low-income housing credit (other) from post-2007 buildings     E Qualified rehabilitation expenditures (rental real estate)     F Other rental real estate credits     G Other rental credits     H Undistributed capital gains credit   Form 1040, line 73, box a     I Biofuel producer credit See the Partner’s Instructions     J Work opportunity credit     K Disabled access credit     Code Report on   L Empowerment zone employment credit See the Partner’s Instructions   M Credit for increasing research activities   N Credit for employer social security and Medicare taxes   O Backup withholding   P Other credits 16. Foreign transactions   A Name of country or U.S. possession Form 1116, Part I   B Gross income from all sources   C Gross income sourced at partner level   Foreign gross income sourced at partnership level   D Passive category Form 1116, Part I   E General category   F Other   Deductions allocated and apportioned at partner level   G Interest expense   Form 1116, Part I   H Other   Form 1116, Part I   Deductions allocated and apportioned at partnership level to foreign source income   I Passive category Form 1116, Part I   J General category   K Other   Other information   L Total foreign taxes paid   Form 1116, Part II   M Total foreign taxes accrued Form 1116, Part II   N Reduction in taxes available for credit Form 1116, line 12   O Foreign trading gross receipts Form 8873   P Extraterritorial income exclusion Form 8873   Q Other foreign transactions See the Partner’s Instructions 17. Alternative minimum tax (AMT) items   A Post-1986 depreciation adjustment See the Partner’s Instructions and the Instructions for Form 6251   B Adjusted gain or loss   C Depletion (other than oil & gas)   D Oil, gas, & geothermal—gross income   E Oil, gas, & geothermal—deductions   F Other AMT items 18. Tax-exempt income and nondeductible expenses   A Tax-exempt interest income   Form 1040, line 8b   B Other tax-exempt income   See the Partner’s Instructions   C Nondeductible expenses   See the Partner’s Instructions 19. Distributions   A Cash and marketable securities See the Partner’s Instructions   B Distribution subject to section 737   C Other property 20. Other information   A Investment income   Form 4952, line 4a   B Investment expenses Form 4952, line 5   C Fuel taxCREDIT INFORMATION Form 4136   D Qualified rehabilitation expenditures (other than rental real estate) See the Partner’s Instructions   E Basis of energy property See the Partner’s Instructions   F Recapture of low-income housing credit (section 42(j)(5)) Form 8611, line 8   G Recapture of low-income housing credit (other) Form 8611, line 8   H Recapture of investment credit See Form 4255   I Recapture of other credits See the Partner’s Instructions   J Look-back interest—completed long-term contracts See Form 8697   K Look-back interest—income forecast method See Form 8866   L Dispositions of property with section 179 deductions See the Partner’s Instructions   M Recapture of section 179 deduction   N Interest expense for corporate partners   O Section 453(l)(3) information   P Section 453A(c) information   Q Section 1260(b) information   R Interest allocable to production expenditures   S CCF nonqualified withdrawals   T Depletion information—oil and gas   U Reserved   V Unrelated business taxable income   W Precontribution gain (loss)   X Section 108(i) information   Y Net investment income   Z Other information