Phil Williams and Liz Johnson are 60% and 40% partners,
respectively, in Williams & Johnson Partnership. Their beginning
basis is $33,000 for Phil and $31,000 for Liz. The partnership had the
following activity during the year:
Interest income 1,259
Dividend income (qualified) 4,586
Long-term capital gains 13,458
Total revenue $355,426
Salaries and wages (nonpartners) $ 47,000
Depreciation (MACRS—includes $9,000 § 179 expense) 41,888
Interest expense 5,220
Taxes and licenses 15,548
Meals (100%) 15,257
Insurance (nonpartner health) 6,000
Accounting and legal 2,800
Charitable contributions 2,500
Payroll penalties 500
Total expenses $268,167
Net income $ 87,259
a. Calculate the ordinary income for the partnership and prepare page
1 of Form 1065.
b. Prepare page 4 of Form 1065.
c. What is the ending basis for Phil Williams?
d. What is the ending basis for Liz Johnson?
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