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
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

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.

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