1065 Tax Return

1065 Tax Return Feeny University, LLC serves as tutors and instructors for college students in the Philadelphia area.  Relevant information is as follows: •    The LLC’s Federal ID number is 00-8675309 •    Feeny uses the cash basis and the calendar year •    The LLC began operations on September 24, 1993 •    The current address is 5688 James Highway, Suite 1000, Philadelphia, PA 19120 •    Feeny is comprised of four equal members: Cory Matthews (123-45-6789), Eric Matthews (987-65-4321), Shawn Hunter (101-01-0101), and Topanga Lawrence-Matthews (010-10-1010) The following information was taken from the LLC’s income statement for the current year: Income Statement Revenues Fees and Commissions            $4,600,000 Taxable interest income from bank deposits            1,800 Tax-exempt interest            3,400 Net gain on stock sales            4,200 Total revenues            $4,609,400 Expenses Advertising and public relations        $370,000 Charitable contributions        27,000 Section 179 expense        19,000 Employee salaries and wages        987,000 Guaranteed payment, Cory Matthews, office manager        810,000 Guaranteed  payment, other members        610,000 Entertainment, subject to 50% disallowance        202,000 Travel        310,000 Legal and accounting fees        134,000 Office rentals paid        85,000 Interest expense on operating line of credit        11,000 Insurance premium        50,000 Office expense        201,000 Payroll taxes        90,000 Utilities         51,000 Total expenses        $3,957,000 During the past few years, Feeny University has taken advantage of bonus depreciation and §179 deductions and fully remodeled the premises and upgraded its leasehold improvements.  This year, Feeny wrapped ups its remodeling with the purchase of $19,000 of office furniture, for which it will claim a §179 deduction.  Feeny University uses the same cost recovery methods for both tax and financial purposes.  There is no depreciation adjustment for alternative minimum tax purposes. Feeny invests much of its excess cash in non-dividend-paying growth stocks and tax-exempt securities.  During the year, the LLC sold two securities.  On June 6, 2013, the company purchased 1,500 shares of Jules, Inc. stock for $120,800; it sold those shares on December 13, 2013 for $128,000.  On April 20, 2006,Feeny purchased 3,000 shares of Bait, Inc. stock for $204,000; it sold those shares for $201,000 on December 13, 2014. Net income per books is $652,400.  The firm’s activities do no constitute “qualified production activities” for purposes of the §199 deduction.  On January 1, 2014, the members’ capital accounts equalled $200,000 each.  No additional capital contributions were made in 2014.  In addition to their guaranteed payments, each member withdrew $250,000 cash during the year. Feeny’s book balance sheet as of December 31, 2014 is as follows. Beginning    Ending Cash    $350,000    $ ?? Tax-exempt securities    110,000    110,000 Marketable securities    540,000    320,000 Leasehold improvements, furniture, and equipment    970,000    990,000 Accumulated depreciation    (970,000)    (990,000) Total assets    $1,000,000    $ ?? Line of credit for operations    $200,000    150,000 Capital, Cory    200,000    ?? Capital, Eric    200,000    ?? Capital, Shawn    200,000    ?? Capital, Topanga    200,000    ?? Total liabilities and capital    $1,000,000    $ ?? All debt is shared equally by the members. Each member has personally guaranteed the debt of the LLC. The business code for “Educational services (including schools, colleges, & universities)” is 611000.  The LLC’s Form 1065 was prepared by Cory Matthews and sent to the Scranton, PA IRS Service Center.  All of the owners are active in Feeny University’s operations.  Prepare Schedule K-1 for Cory Matthews, 567 Phillips Road, Philadelphia, PA 19109.