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Financial StatementsPARTNERSHIP TAX RETURN PROJECT CASE INFORMATION $$ AC$312$

General Information

August Easter and Grace Jackson own Notorious B$.$B$.$Q$.($NB$),$ a limited partnership. NB sells a variety

of rubs, sauces, and accessories for grilling and smoking meat. NB was formed on August $18,2020$

and operates out of Kansas City, Missouri. August is a general partner, manages the operations of

the business, and holds $55\%$ profits, loss, and capital interests. Grace is a limited partner, is an

investor only, and holds the remaining $45\%$ profits, loss, and capital interests.

Following is additional information related to NB:

$$ Office Location: $543$ BBQ Lane, Kansas City, MO $64119$

$$ Employer Identification Number: $99-8888777$

$$ Business activity code: $445290$

$$ August$$s address is: $789$ Brisket Ave., Kansas City, MO $64114,$ and his social security number is

$123-12-1234.$

$$ Grace$$s address is: $123$ Ribs Lane, Kansas City, MO $64158,$ and her social security number is

$987-98-9876.$

$$ August is the partnership representative, and his phone number is $(816)111-2222.$

Financial Information

Following is pertinent information related to NB$$s financial activities in $2022$:

$$ NB uses the accrual method of accounting and has a calendar year$-$end.

$$ NB owns $5,000$ shares of BBQ Holdings, Inc. $($BBQ$)$ stock, which represents less than $1\%$

ownership. BBQ is a US $($domestic$)$ corporation. BBQ distributed a $$1,900$ qualified dividend

to NB on August $1.$

$$ Of the $$1,800$ in interest income, $$400$ was from a Kansas City bond and $$1,400$ was from a

bank account.

$$ All guaranteed payments were made to August for services provided to the partnership.

$$ On December $15,2022,$ NB distributed $$12,000$ to August and $$8,000$ to Grace.

$$ The charitable contribution made during the year was paid in cash.

$$ The $$5,600$ interest expense was related to the notes payable. The note payable is a business

loan and is nonrecourse debt. $($Note: The debt is NOT qualified nonrecourse financing.$)$

$$ Included in the other expenses amount was a sales tax penalty in the amount of $$230$ that

was assessed when NB failed to pay its sales tax on time.

$$ The partnership uses the FIFO inventory method and values its inventory at lower of cost or

market. In addition, UNICAP rules of $263$A do not apply and there was no change in

determining quantities, cost, or valuations between opening and closing inventory.

$$ August, as general partner, is legally responsible for paying NB$$s accounts payable if the

partnership fails to do so$.$

$$ NB did not have any current year fixed asset purchases. In $2020$ and $2021,$ all fixed assets

purchased were fully depreciated using bonus depreciation.

$$ For the purposes of the Qualified Business Income Deduction, the unadjusted basis of

qualified property immediately after acquisition is $$54,000.$

$$ Assume that NB did not make any payments that would require it to file Form$($s$)1099.$

$2022$ Form $1065$

$2022$ Form $1065$

$2022$ Form $1125-$A

$2022$ Form $1125-$A

$2022$ Schedule B$-1,$ Form $1065$D

$2022$ Schedule B$-1,$ Form $1065$

$2022$ Schedule K$-1,$ Form $1065$

$2022$ Schedule K$-1,$ Form $1065$

Form $1065$ Supporting StatementDownload Form $1065$ Supporting Statement

Form $1065,$Schedule K$-1,$ Line $20$ Supporting Statement

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