Wilson and Walters are the members of Woody’s Widgets LLC. Wilson owns 40% and Walters owns 60%. They are both active in the business, working every day. Capital, profits and losses are shared in proportion to ownership. Woody’s is on the accrual basis of accounting and has a December 31 year end. Woody’s makes and sells widgets. It has no farm, oil or gas operations.
Here is Woody’s 2013 Financial Information:
Sales $7,500,000
Returns 750,000
Cost of Goods Sold 3,750,000
Section 179 Election 150,000
Depreciation 627,000
Electricity 90,000
Telephone 42,000
Postage 20,000
Health insurance 226,000
Liability insurance 100,000
Rent 900,000
Meals & Entertainment 300,000
Automobile
Employees 60,000
Members 40,000
Life Insurance
Employee Group Term (max. $50,000) 17, 250
Members 25,000
Contribution to Profit Sharing Plan 444,000
Charitable Contributions
Public Charities 120,000
Private Foundations 20,000
Dividends Received (publicly traded US) 200,000
LT Capital Gain 100,000
LT Capital Loss 60,000
ST Capital Gain 25,000
ST Capital Loss 75,000
Interest
US corporate bonds 149,600
Michigan bonds 20,000
US Treasuries 25,000
Each member’s draw is $20,000 per month. During 2013, each member received the following distributions:
Cash $50,000
Property
Wilson GE Stock FMV = $2,500
Walters Computer, Truck, CNC machine Total FMV= $18,800
As of January 1, Wilson’s capital account is 60,000 and Walter’s capital account is $100,000. No capital was contributed in 2013. Both are member-managers. They file their returns in with the Ogden, UT service center.
The LLC has no foreign accounts. All of the employees are US citizens, as are Wilson and Walters.
Please prepare the following:
1065 Page 1
Page 4 Schedule K
Schedule D (Form 1065)
Schedule K-1 for both Wilson and Walters (Extra Credit)
