I have been working on it and I only need help with second part of the question
3.1.01 3.1.01. A schedule showing the basis of the apartment complexes contributed by Alan and Bonnie. YearParty Planet MACRS rateDumpster View MACRS rate 3 Years Ago 2 Years ago Last Year Total00 AssetOriginal basisCumulative MACRS rate (%)Accumulated tax depreciationAdjusted basis (AB)Fair market value (FMV)Pre-contribution gain (FMV less AB) Planet- 0- 0- 0 Dumpster- 0- 0- 0 Land- 0- 0- 0 Tara Hawkins Rebecca Murray Jamie Reynolds411 Partnership Case&D &T &P 3.1.02 3.1.02. The tax and book journal entries to record the formation of the partnership. TAXDrCr Alan’s Contributions Bonnie’s Contributions BOOKDrCr Alan’s Contributions Bonnie’s Contributions TAXDrCr Deemed Distribution to Pay for Services Deemed Contribution by Chuck BOOKDrCr Admission of Chuck Tara Hawkins Rebecca Murray Jamie Reynolds411 Partnership Case&D &T &P 3.1.03 3.1.03 Calculate the tax gains on formation and the character of these gains Party planet apartments (Alan)Dumpster view apartments (Bonnie)Land (Bonnie) Amount realized Less: adjusted basis Gain realized and recognized- 0- 0- 0 Character: Unrecaptured §1250 Gain (depr.*10%) §1231 Gain- 0- 0 Capital Gain- 0 Tara Hawkins Rebecca Murray Jamie Reynolds411 Partnership Case&D &T &P 3.1.04 3.1.04. A reconciliation of book assets and equity. Assets Cash Party Planet Apartments Dumpster View Apartments Land Intangible Assets Total Assets- 0 Liabilities and Equity Liabilities & Equity Mortgages Payable Capital: Alan Bonnie Chuck Total Capital- 0 Total Equity- 0 Tara Hawkins Rebecca Murray Jamie Reynolds411 Partnership Case&D &T &P 3.1.05 3.1.05. A schedule showing how the recourse loan is to be allocated to the partners. CashParty Planet ApartmentsDumpster View ApartmentsLandIntangiblesTotal Amount realized- 0 Less: book value- 0 Deemed loss- 0 AlanBonnieChuck Capital after formation Less: Deemed loss- 0- 0- 0 Deemed ending capital- 0- 0- 0 DrCr Worksheet EntryM/P - Planet- 0 Allocating RecourseAlan's Basis- 0 Debt to OutsideBonnie's Basis- 0 BasisChuck's Basis- 0 Tara Hawkins Rebecca Murray Jamie Reynolds411 Partnership Case&D &T &P 3.1.06 3.1.06. A schedule showing how the nonrecourse loan is allocated to the partners. Three-tier process for allocating nonrecourse liabilities after formation. Tier 1 – Minimum gain Loan Amount Less: Book value of property Minimum Gain Tier 2 – §704(c) Pre-contribution gain Loan Amount Less: Adjusted basis of propertyBasis after admission of Chuck Allocation to Bonnie Tier 3 – Excess allocated using profit percentages Alan: Bonnie: Chuck: DrCr Worksheet EntryM/P - Apt 2- 0 Allocating NonrecourseAlan's Basis- 0 Debt to OutsideBonnie's Basis- 0 BasisChuck's Basis- 0 Tara Hawkins Rebecca Murray Jamie Reynolds411 Partnership Case&D &T &P 3.1.07 3.1.07. A reconciliation of inside and outside basis after formation. INSIDE Contributions by Alan and BonnieLess: distributions to ChuckPlus: contributions by ChuckEnding inside basis Cash- 0 Party Planet Apts.- 0 Dumpster View Apts.- 0 Land- 0 Intangibles- 0 Total inside basis5,328,141 OUTSIDE Initial contributionsGain on distribution to ChuckGuaranteed payment/contribution by ChuckRecourse DebtNonrecourse DebtEnding outside basis Alan- 0 Bonnie- 0 Chuck- 0 Total outside basis5,328,141 Tara Hawkins Rebecca Murray Jamie Reynolds411 Partnership Case&D &T &P 3.2.01 3.2.01. The tax and book entries to record the operating events. January 2 Partnership invested $200,000 in municipal bonds returning 4.5% interest and $250,000 in a money market account returning 2% interest (compute the interest using simple interest). The interest earned in these accounts was transferred to the checking account. As a result, the investment balances remained unchanged at year end. (Tax / Book are the same for the investing but different for interest income recognition) Date/EventDrCr January 2Inv in Muny Bonds200,000 Inv in Money Market250,000 Cash450,000 January 2 Office furniture was purchased for $20,000 and computers were purchased for $4000. The partnership elected to expense the cost of these items using §179 in section 3.2.02. Date/EventDrCr January 2Furniture20,000 Computers4,000 Cash24,000 February 10 The partnership purchased an apartment complex, Grease Trap Apartments, for $1 million by paying $200,000 cash and financing the remainder with a recourse loan. The partnership agreement was amended at this time to indicate that 20% of the depreciation is to be specially allocated to Bonnie with the remaining 80% of the depreciation to be shared amongst the partners according to their loss sharing percentages. Date/EventDrCr February 10 November 17 The partnership distributed the land held for investment to Alan. At the time of the distribution, the land was valued at $316,000. The partnership agreement does not call for optional revaluations. The partners treated the transaction as a current distribution (Although you are to treat this transaction as a current distribution, please address the treatment that this transaction should receive). Revaluation book entry is: Date/EventDrCr November 17 Tax entry to recognize the precontribution gain is: Date/EventDrCr November 17 The tax entry to record the distribution is as follows: Date/EventDrCr November 17 The book entry to record the distribution is as follows: Date/EventDrCr November 17 Tara Hawkins Rebecca Murray Jamie Reynolds411 Partnership Case&D &T &P 3.2.02 3.2.02. A schedule showing tax depreciation and book depreciation for the year. At the completion of the schedule, arrive at a book/tax difference. Grease Trap Apartments Depreciation (Book/Tax Same b/c no revaluations): Original cost1,000,000 MACRS rate3.182% Tax and book depreciation31,820 Party Planet Apts (Tax Depreciation): At time of contributionLess: transfer to Chuck (10%)After transfer (90%) Original cost1,600,000160,0001,440,000 Less: accum depr- 0- 0- 0 Adjusted basis1,600,000160,0001,440,000 Contribution by Alan:Contribution by Chuck: Original cost x 90% remaining1,440,000Original cost- 0 MARCRS rate3.636%MACRS rate3.485% Depreciation on original asset52,358Depreciation on new asset- 0 If book value is added, then the depreciation rate must be accelerated; if book value is reduced, then the depreciation rate must be decelerated Current year′s tax depreciation ÷ Beg. Tax Basis = CY Book Depr. Rate for Contributed Property 52,3581,440,0003.636% Party Planet Apts. (Book Depreciation): Contribution by Alan:Contribution by Chuck: Book value × 90% remaining- 0Original cost- 0 New book depreciation rate3.636%MACRS rate3.485% Depreciation on original asset- 0Depreciation on new asset- 0 Dumpster Apts. (Tax Depreciation): At time of contributionLess: transfer to Chuck (10%)After transfer (90%) Original cost2,500,000250,0002,250,000 Less: accum depr102,27510,22892,047 Adjusted basis2,397,725239,7722,157,953 Contribution by Bonnie:Contribution by Chuck: Original cost ×90% remaining- 0Original cost- 0 MARCRS rate3.636%MACRS rate3.485% Depreciation on original asset- 0Depreciation on new asset- 0 If book value is added, then the depreciation rate must be accelerated; if book value is reduced, then the depreciation rate must be decelerated Current year′s tax depreciation ÷ Beg. Tax Basis = CY Book Depr. Rate for Contributed Property - 02,157,9530.000% Dumpster View Apts. (Book Depreciation): Contribution by Bonnie:Contribution by Chuck: Book value × 90% remaining- 0Original cost- 0 New book depreciation rate0.000%MACRS rate3.485% Depreciation on original asset- 0Depreciation on new asset- 0 Tax depreciation entries are as follows: EventDrCr PersonalDepreciation Exp24,000 PropertyAccumulated Dep24,000 Real PropertyDepreciation Exp84,178 Planet Apt52,358 Dumpster Apt- 0 Grease Apt31,820 Book depreciation entries are as follows: EventDrCr PersonalDep Exp - Computer4,000 PropertyDep Exp - Furniture20,000 Accumulated Dep24,000 Real PropertyDepreciation Exp31,820 Planet Apt- 0 Dumpster Apt- 0 Grease Apt31,820 The tax entries for operations are as follows: EventDrCr Revenue Deductions (Other than Depreciation) Nondeductible Cash Expenses Loan Payments The book entries for operations are as follows: EventDrCr Revenue Expenses (Other than Depreciation) Loan Payments Operations with same Book/Tax entries are as follows: EventDrCr Owner Distributions Start-up / Organizational Costs Amortization Tara Hawkins Rebecca Murray Jamie Reynolds411 Partnership Case&D &T &P 3.2.03 3.2.03. A schedule allocating the book and tax depreciation to the partners. Office Furniture and Computers §179 ExpenseBookTax Alan Bonnie Chuck Total Party Planet Apts: PartnerBookTax on Asset Contributed by AlanTax on Asset Contributed by ChuckTotal TaxDifference (Precontrib. Gain recog. By Partner) Alan Bonnie Chuck Total Dumpster View Apts: PartnerBookTax on Asset Contributed by BonnieTax on Asset Contributed by ChuckTotal TaxDifference (precontrib. gain recog. By partner) Alan Bonnie Chuck Total Grease Trap Apts: PartnerBookTax Alan Bonnie Chuck Total Tax Depreciation Alan- 0 Bonnie- 0 Chuck- 0 Total- 0 704(b) Book Depreciation Alan- 0 Bonnie- 0 Chuck- 0 Total- 0 Tara Hawkins Rebecca Murray Jamie Reynolds411 Partnership Case&D &T &P 3.2.04 3.2.04. A schedule that ties out cash from formation to the end of the year. The process of earning income often changes asset balances, particularly cash. The cash reconciliation is presented below: Beginning balance Cash inflow: Contributions at formation Rental receipts Interest receipts - 0 Cash outflows: Investments Purchase of office furniture and computers Purchase of Grease trap apartments Deductible cash expenses Nondeductible cash expenses Draws by Alan and Bonnie Principal on loans - 0 Ending balance- 0 Tara Hawkins Rebecca Murray Jamie Reynolds411 Partnership Case&D &T &P 3.2.05 3.2.05. A schedule reconciling tax and book income. TaxBookM-1 Item AmountM-1 Item Description Panel A – Determination of tax and book income Income Less: Cash deductions Plus: Guaranteed payment to Chuck Less: Guaranteed payment for admission of Chuck Less: Amortization expense Less: Depreciation expense Plus: Gains at formation Plus: Gains on distribution of land Total income/loss- 0- 0- 0 Panel B – Reconciliation of tax and book income (Schedule M-1) Book Income (Loss) Plus: Guaranteed payment Plus: Nondeductible expenses Plus: Depreciation difference Plus: Pre-contribution gains at formation Plus Pre-contribution gain on distribution of land Less: Tax-exempt interest Less: Book-up gain Tax income- 0 Tara Hawkins Rebecca Murray Jamie Reynolds411 Partnership Case&D &T &P 3.2.06 3.2.06. A schedule allocating the income and deductions for the partnership (Schedule K) to the partners (Schedule K-1). TotalAlanBonnieChuck Receipts Less: Cash deductions Plus: Guaranteed payment for year to Chuck Less: Guaranteed payment for Chuck Less: Amortization expense Less: Depreciation expense Plus: Gains at formation Plus: Gains on distribution of land Total income/loss- 0- 0- 0- 0 Tax Exempt Income: Muny Bond Interest Non-deductible expenses: Charity 50% Meal and Entertainment Political Contributions \ Tara Hawkins Rebecca Murray Jamie Reynolds411 Partnership Case&D &T &P 3.2.07 3.2.07. Closing entries The closing entries for tax are as follows: EventDrCr Closing Revenue To Partners Closing Deductions to Partners Closing Amortization to Partners Closing Deprecation to Partners Closing Gains from Formation Closing Gain from Distribution of Land Closing Nontaxable Income Closing Nondeductible Expenses The closing entries for book are as follows: EventDrCr Closing Revenue To Partners Closing Deductions to Partners Closing Amortization to Partners Closing Deprecation to Partners Closing Gain from Distribution of Land Tara Hawkins Rebecca Murray Jamie Reynolds411 Partnership Case&D &T &P 3.2.08 3.2.08. A reconciliation of book assets and equity. Assets Cash Investments Party planet apartments Dumpster view apartments Grease trap apartments Intangible assets Total assets- 0 Liabilities & Equity Mortgages payable Capital Alan Bonnie Chuck Total capital- 0 Total equity- 0 Ending capital is determined as follows: TotalAlanBonnieChuck Capital after Formation Add: Book Revenue Less: Cash Deductions Less: Amortization Less: Depreciation Plus: Book-up gain Less: Land distribution Less: Partner draws Ending capital2,995,557- 0- 0- 0 Tara Hawkins Rebecca Murray Jamie Reynolds411 Partnership Case&D &T &P 3.2.09 3.2.09. A schedule showing how the recourse loans are to be allocated to the partners. CashInvestmentsParty Planet Apts.Dumpster View Apts.Grease Trap Apts.IntangiblesTotal Loss Amount realized Less: book value Deemed loss- 0 TotalAlanBonnieChuck Capital at year end Less: deemed loss- 0- 0- 0- 0 Deemed ending capital- 0- 0- 0-