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Tax Return 9: PartnershipInstructions:Please compl

Tax Return 9: PartnershipInstructions:Please complete the required federal partnership income tax return forms for AAA Fast Plumbing for the 2013 tax year based upon the facts presented below. If required information is missing, use reasonable assumptions to fill in the gaps. Ignore all AMT calculations and AMT related tax differences.Michael Rodriguez and Devontae Johnson have been life-long friends. Both Michael and Devontae started to work for the same national plumbing repair company immediately after graduating from technical college. After nearly a decade of working for that same company, Michael and Devontae decided to venture out on their own and form their own plumbing company called AAA Fast Plumbing Repair (AAA). They formed their business entity as a limited liability company (LLC). Michael and Devontae each own 50% of the company. The company has been successful primarily based upon reputation and the fact that AAA is available 24 hours a day, seven days a week. Although AAA charges a premium for after normal business hour calls, most of its competitors will not perform services past 9 p.m. and, as a result, AAA finds itself often as one of the only available choices for middle of the night emergencies.AAA has several employees and, as a result of implementing technology solutions to aid in its call dispatch program, AAA has been able to expand its service area to now include a three-county area instead of just one.Information relating to AAA and its owners is as follows:Name of Company: AAA Fast Plumbing Repair, LLCAddress: 1456 East Buena Vista Blvd.Los Angeles, CA 90001 (has not changed since inception)Company formed and started: January 1, 2007Accounting Method: CashTax-year end: December 31Employer Identification Number: 34-1234567Members’ Information:Michael Rodriguez1515 West Bloomington StreetLos Angeles, CA 90001SSN- 585-31-6060Profit/Loss/Capital membership interest is 50%.Devontae Johnson19 East Violet CircleLos Angeles, CA 90001SSN: 397-29-9239Profit/Loss/Capital membership interest is 50%.Other information:AAA is a domestic limited liability companyMichael and Devontae are not related.Michael and Devontae are both U.S. citizens.Both Michael and Devontae are managing members.AAA has not and did not file a Form 8893 or anything similar to it this year or in the pastAAA is not a publicly traded partnershipDuring the year no debt was cancelled or forgiven in relation to AAA.AAA is not required to file a Form 8918AAA did not have or control a foreign bank account or have authority over any such financial accountAAA was not the grantor of or a transferor to a foreign trustAAA has never made a Section 754 electionAAA has never entered into a like-kind exchange or distributed a tenancy-in-common or other undivided interest in partnership propertyAAA has never been required to file Form 8858AAA was required to file Form(s) 1099 related to certain payments it made during the year and those forms were filed on a timely basisAAA was not required to file any Form(s) 5471 during the yearMichael is the Tax Matters Partner (TMP)Both Michael and Devontae are active in the business and work full-time for AAAThe debt owed to First National Bank is a non-recourse obligation and neither Michael nor Devontae have guaranteed its repayment (see balance sheet below). This debt is not directly tied to any specific asset but is rather a debt secured against all of the assets of the company. with neither Michael nor Devontae personally responsible for its repayment.During the year, Michael and Devontae each contributed $20,000 to the capital of AAAAAA does not maintain any inventory. AAA purchases supplies and has a policy of expensing such purchases as paid for tax and book purposesDuring the year, Michael and Devontae each received a $75,000 distribution from each of their respective capital accountsDuring the year, AAA acquired the following assets (all assets were placed in service on the acquisition dates as indicated below):Service vans-new (not Luxury Automobiles) July 1, 2013 $500,000Plumbing machinery/equipment-new July 1, 2013 $250,000AAA did not claim Section 179 expense for any of the current year asset additions but it did claim available bonus depreciation.Financial Statements:Balance SheetAssets: 1/01/13 12/31/13Cash $ 30,000 $ 45,000Tax-exempt Securities 100,000 100,000Building 4,000,000 4,000,000Less: Acc. Depreciation (551,282) (653,842)Equipment 2,500,000 3,250,000Less: Acc. Depreciation (1,481,400) (2,231,663)Land 1,000,000 1,000,000Total Assets: $5,597,318 $5,509,495Liabilities and Capital:Note Payable-First National Bank $4,267,318 $4,046,673Note Payable-Michael Rodriguez 300,000 300,000Note Payable-Devontae Johnson 200,000 200,000Capital Account-MR 415,000 481,411Capital Account-DJ 415,000 481,411Total Liabilities and Capital: $5,597,318 $5,509,495Income Statement for the year ending December 31, 2013Item AmountIncome:Service Revenue-Cash $ 343,565Service Revenue-Credit Cards $1,922,710Consulting Revenue-Cash $ 50,950Consulting Revenue-Credit Cards $ 155,005Interest Income-First National Bank $ 1,540Municipal Bond Interest Income $ 2,500Total Income: $2,476,270Expenses:Employee Salaries $ 515,735Guaranteed payment-MR $ 50,000Guaranteed payment-DJ $ 50,000Repairs and Maintenance-Trucks $ 113,415Rent $ 35,000Payroll Taxes $ 41,260Licensing Fees $ 1,750Property Taxes $ 77,000Interest Expense $ 235,000Depreciation $ 852,823Office Supplies $ 3,420Employee Training $ 5,675Advertising $ 18,850Plumbing supplies $ 15,125Meals and Entertainment (prior to disallowance) $ 13,740Travel $ 4,210Gasoline $ 158,675Utilities $ 24,940Telephone $ 16,830Total Expenses: $2,233,448Net Income: $ 242,822

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